What happened
Shares of Applied Optoelectronics (AAOI +0.32%) gained 163.6% in the first half of 2017, according to data from S&P Global Market Intelligence.
So what
The maker of optoelectronic components won its market gains by repeatedly reporting quarterly results way ahead of analyst expectations -- and the company's own projections. In fact, management pre-announced rosy fourth-quarter results in January, then crushed that slate of preliminary figures in February.
Image source: Getty Images.
Now what
The fiber-optic networking market is turning a corner in 2017, as telecoms around the world prepare to install next-generation 5G wireless networks. The much larger demands 5G networks will place on their back-end connections are forcing the telecoms to upgrade both their internet backbone connections and in-house data center networks, and fiber-optics offer the fastest and most cost-effective network solutions.
On top of that sectorwide macro trend, Applied Optoelectronics collects roughly half of its revenues from e-commerce and cloud computing giant Amazon.com (AMZN +2.02%). Amazon's business is booming, and its cloud-computing data centers have become essential to its profit generation. That's another solid growth driver for Applied Optoelectronics and its high-speed data center interconnects.
