Why Poet Stock Gained 19.9% Last Month and Is Skyrocketing in May

Poet Technologies (NASDAQ: POET) stock saw some huge fluctuations in April's trading, but it managed to close out the month with big gains. The fiber-optics company's share price rose 19.9% in the month's trading, far exceeding the S&P 500's impressive gain of 10.4% and the Nasdaq Composite's even more striking 15.3% surge.

Poet stock enjoyed strong bullish momentum in conjunction with broader-market trends last month as investors aggressively bought back into artificial intelligence (AI) stocks following sell-offs in the previous month. In addition to that catalyst, the stock also saw periods of strong valuation gains in response to contract speculation and news -- but there was a catch.

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April was a wild month for Poet investors

Along with risk-on trading shaping moves across the broader market last month, Poet stock saw gains throughout the first three weeks of April's trading connected to speculation about the company's order outlook. Investors got the positive confirmation they were hoping for on April 21 when Stocktwits published an interview with Poet CEO Thomas Mika.

Among other points discussed in the interview, Mika confirmed that Poet had secured an order from Celestial AI -- a company that had been acquired by Marvell Technology. With Marvell recently expanding its partnership with Nvidia and scoring wins in other corners of the AI market, the news caused a massive rally.

Unfortunately, hopes for a deal with Marvell were soon dashed -- and Poet stock gave up its massive, post-news gains in response. Poet published a press release on April 27 announcing that it had received an order cancellation notice from Marvell, citing disclosure violations for the contract's violations. But despite seeing huge sell-offs following the deal's cancellation, Poet stock still ended April with big gains.

Poet stock is roaring higher in May

Following its big pullback toward the end of April, Poet stock has been on a massive rally this month. The company's share price is up roughly 50% this month -- crushing the S&P 500's 2.6% gain and the Nasdaq Composite's gain of 5.3%.

While bullish momentum for the broader market has surely helped support Poet's rally, the gains are eye-catching because they have occurred in the absence of any major, publicly available business news for the company. Investors may be betting that the company's order outlook continues to be strong despite Marvell's order cancellation, and it's also possible that meme stock trading is playing a role in the gains.

Poet's huge rally in May raises some interesting questions, and investors may be wondering whether or not to be into the stock on the hopes that the company will soon announce a major new contract. While it's possible that the stock could keep rallying, investors should approach Poet shares with the understanding that the photonics specialist is a speculative, high-risk investment.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Marvell Technology and Nvidia. The Motley Fool has a disclosure policy.