How Applied Optoelectronics Rose 164% So Far in 2017

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What happened

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Shares of Applied Optoelectronics (NASDAQ: AAOI) 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.

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.

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On top of that sectorwide macro trend, Applied Optoelectronics collects roughly half of its revenues from e-commerce and cloud computing giant Amazon.com (NASDAQ: AMZN). 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.

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Anders Bylund owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.