• AAOI bought land in Texas to expand its manufacturing and assembly operations.
• The move comes after securing $124 million in orders from hyperscaler customers.
• With the stock surging 4x this year, retail investors are split on whether the rally is sustainable or overheated.

Shares of Applied Optoelectronics (AAOI) are on the verge of a ninth consecutive gain, with the stock hitting fresh 52-week highs in premarket trading on Tuesday. The stock has risen nearly 5% before the bell as investors pile into AI-linked infrastructure plays.

The stock has nearly doubled in value so far this April and closed with gains for an eighth consecutive trading session on Monday. When zooming out even further, AAOI has more than quadrupled this year, while the benchmark S&P index rose only 0.6% for the same period.

What’s Behind AAOI’s Latest Rally?

The company, which makes fiber optic components for telecom, cable TV, and datacenter customers, on Monday after the bell disclosed in a Securities and Exchange filing that it has purchased a 388,133 square feet property in Texas for $58.4 million, which it intends to use for “office, warehouse, manufacturing, and assembly purposes.”

The move to expand operations comes after the company secured two orders totaling $124M from customers building datacenters in the U.S. to meet rising demand for artificial intelligence.

Hyperscalers like Google, Amazon, and Meta are competing aggressively to maintain their lead in the AI race by shelling out hundreds of billions of dollars on datacenter infrastructure projects to boost their compute capacity.

AAOI Stock: How Did Retail Traders React?

On Stocktwits, retail sentiment and messaging volumes have remained ‘high’ over the past 24 hours, and bulls and bears on the platform are closely monitoring AAOI while clashing over whether the rally is driven by an AI boom or bubble.

Among bulls, a user on the platform noted that execution is key for AAOI at this point. 

Among bears, one user calls the stock “extremely dangerous” at current levels and recommends that investors exit their AAOI position once it hits $160.

Last Friday, notable short seller Citron Research shorted the stock and warned that the company’s recent stock surge is disconnected from its fundamentals and is unlikely to sustain if the buzz fades.

A bull user on the platform bashed the earlier Citron report on AAOI and expressed their disdain, while a bear thinks the research firm was a bit early in calling out the stock.

It is also notable that AAOI has outlandishly outperformed the widely tracked State Street ETFs covering the technology (XLK) and communications services (XLC) sectors, which have risen 1.1% and declined 2.5%, respectively.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Read Next: GoPro Rallies 20% In Premarket As Action Camera Maker Charts Course For Defense Sector Entry