Awakened Increased Area of Effect bugged w/ Blazing Salvo?

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This is due to a limitation of the stats system in displaying this.
Because the fireball isn't always area damage (if it pierces something, there's no area of effect, it just hits that one thing), it can't have the area damage stat built in. Instead that stat is added when it explodes, thus making the area damage increases apply.
But because when looking at the skill you're seeing the damage calculated on the base fireball stats, it's not yet flagged as area damage so you won't see it apply.