Data-center demand can keep driving upside for Applied Optoelectronics (AAOI +13.9%), analysts say after the company dropped some preliminary Q1 numbers that exceeded expectations by far.

Along with revenue estimates at least 5.7% higher than forecast, and net income nearly 15% higher, gross margins are coming in more at 42.5% to 42.9%, above expectations for 38-40%.

That's due to big (and still growing demand) from major data-center players including Facebook, Amazon.com and Microsoft, as well as some supply constraints in 100G transceivers.

"The vast majority of the 100G opportunity still lies ahead," says Cowen's Paul Silverstein, who has one of the highest price targets after boosting it to $75 from $66 (more than 60% upside). The company can keep boosting gross margins despite price erosion due to vertical integration among 100G components, he says.

Jefferies notes peers most likely to benefit from Applied's successful results: Chiefly Finisar (FNSR +3.1%), along with Oclaro (OCLR +0.9%), Lumentum (LITE +1.6%) and Mellanox (MLNX +0.5%). Q2 guidance should be strong, analyst James Kisner notes, with China resuming purchases and hyperscale demand ramping up.

Related tickers on the move: IIVI +2.7%, FN +2.7%, VIAV +0.7%, CIEN+2%, ACIA +4.2%, NPTN +0.4%, INFN +2.9%.