Aeva Technologies' (AEVA) "potentially transformational" development deal with a hyperscaler could scale into annual revenue in the multiple billions of dollars and drive significant unit volume growth, Oppenheimer said in a Thursday note.

The company is creating a dedicated business division called "Optical Connectivity" due to the scope and scale of the data center opportunity. The new division is aimed at preventing distraction from its other business lines, Oppenheimer analysts said.

The analysts said that the opportunity could require eight to 10 times more units than Aeva's existing target markets, enabling the company to benefit from scale benefits and cost reduction on its other offerings.

The new opportunity is likely only the first of multiple agreements to come, as Aeva is aiming to close development deals with other hyperscalers and server original equipment manufacturers, the analysts said. They predicted that interest in Aeva would be "significant" from other hyperscalers seeking to keep up with competitors, with the company aiming for initial deployments in 2027 and scaling in 2028.

Oppenheimer reiterated the company's stock rating at outperform and raised the price target to $42 from $33.

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