Shares of Applied Optoelectronics (NASDAQ:AAOI) surged more than 12% pre-market today following the company's announcement of a new agreement with Microsoft (NASDAQ:MSFT). Under the agreement, Applied Optoelectronics will offer specific design and assembly services for goods to Microsoft. The duration of the agreement is set for five years and will renew automatically unless either party terminates it.

The scope of work within the agreement includes provisions that emphasize Applied Optoelectronics' commitment to maintaining a dedicated production line for the goods and offering a three-year warranty for them, as stated by the company.