Applied Optoelectronics (AAOI) stock surged 5.06% in pre-market trading on Wednesday, following Nomura's initiation of coverage with a Buy rating and a price target of $41.

The positive analyst action from Nomura, which sees significant upside potential for the fiber optics component manufacturer, has fueled investor enthusiasm and propelled the stock higher in the pre-market session.

According to analysts polled by FactSet, Applied Optoelectronics currently has an average rating of Overweight and a mean price target of $37.89, indicating that analysts expect further upside potential for the stock.