Shares of Finisar (FNSR) took a beating in March after the company's third-quarter financial performance wasn't good enough to match Wall Street's expectations. In fact, the fiber-optic components supplier has failed to meet analysts' estimates over the last two quarters despite reporting impressive year-over-year growth in its revenue and earnings.

When Finisar reported fiscal fourth-quarter results last month, its revenue missed analyst expectations by a whisker, while the midpoints of its revenue and earnings guidance for Q1 were way below expectations. Still, Finisar shares soared as investors latched onto a potential design win from Apple (AAPL 0.06%) for the next iPhone.

A Finisar wavelength selective switch

Image source: Finisar. 

This Apple rumor has sparked a comeback

Some investors and analysts believe that Finisar's 3D sensors have scored a place in Apple's next iPhone. In the last earnings conference call, management sounded enthusiastic about the adoption of its vertical-cavity surface-emitting laser (VCSEL) that is used to enable 3D sensing applications.

CEO Jerry Rawls has stated that Finisar has already received production purchase orders for VCSEL, and could start shipping substantial volumes from the second quarter of fiscal year 2018 once it receives customer approval. Finisar also made it clear that it is engaging with a number of customers, though the majority of the short-term revenue gains will be driven by just one customer.

Finisar's fiscal second quarter (August to October) coincides with the probable launch of the next iPhone, so it isn't surprising to see analysts and investors making a connection between Finisar and the iPhone. If Finisar actually manages to land a spot in the iPhone, it could make big money later this year, as the smartphone giant is expected to build 100 million to 110 million iPhones in the second half of the year.

But Finisar investors shouldn't be overly optimistic as there is another company competing to supply the 3D sensing spot that would help with augmented reality.

Don't forget Himax

Semiconductor and sensor specialist Himax Technologies (HIMX -1.60%) has rallied remarkably this year, as its progress in wafer-level optics (WLO) sensors has some expecting it to score the 3D design slot at Apple.

Morgan Stanley's Charlie Chan believes that Himax's WLO technology can bring 3D sensing technology to smartphones given its small size, and that this segment could supply 20% of the company's revenue by next year. Not surprisingly, the company has decided to invest aggressively in this space to build its WLO capacity.

So Finisar doesn't have a clear field here. 

It's also possible that Apple will give its 3D sensing business to more than just one supplier. Investment banking firm Piper Jaffray believes that Finisar will be given a 20%-25% share of an estimated 60 million iPhone 3D sensing modules, which would boost its top line by a total of $60 million over the next two quarters assuming an average selling price of $4 per module and a 25% share.

Finisar recorded $357 million in revenue during the last-reported quarter, so $60 million would be a big boost. But a greater portion of the pie could further boost Finisar's business and help the stock sustain its newly found momentum.