Applied Optoelectronics' stock plummeted 6.49% during intraday trading on Tuesday, as concerns over delayed co-packaged optics (CPO) deployment timelines weighed on investor sentiment.

The decline follows a SemiAnalysis report suggesting that large-scale CPO adoption could be delayed to 2028 or 2029, significantly later than the market's prior consensus of 2027 full-volume deployment. The report cited system-level yield rates potentially as low as 19.4%, dampening aggressive near-term expectations for the optical communication sector.

Although NVIDIA executives had publicly confirmed CPO switch deployments and on-schedule mass production plans the previous day — which initially sparked a sector rebound — the relief proved short-lived as skepticism over production feasibility persisted, leading to renewed selling pressure on Applied Optoelectronics.