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Aeva Technologies (AEVA) has attracted fresh attention after launching its Optical Connectivity business for AI data centers, signing a joint development agreement with a major customer, and reporting quarterly results that exceeded analyst earnings expectations.

See our latest analysis for Aeva Technologies.

The recent earnings beat and launch of Aeva Technologies' Optical Connectivity business have coincided with sharp share price momentum, including a 1-day share price return of 28.81% and a 90-day share price return of 86.15%. The 3-year total shareholder return of 381.14% contrasts with a 5-year total shareholder return that is down 43.74%, highlighting both strong recent interest and a more mixed longer-term record.

If the AI data center story has caught your attention, it can be worth seeing what else is moving through the same theme by checking out 55 AI infrastructure stocks

The question now is whether Aeva Technologies' sharp re‑rating mainly reflects genuine progress in Optical Connectivity and earnings, or whether sentiment around AI infrastructure has simply swung hard in its favor as investors reassess valuation.

Aeva Technologies is trading at a last close of $25.26, while the SWS DCF model estimates a future cash flow value of $61.92 per share. On this basis, the stock is described as trading at a 59.2% discount to that fair value estimate.

The SWS DCF model projects a stream of future cash flows and then discounts those back to today using a required rate of return. This approach focuses on the company's ability to generate cash in the future rather than current reported earnings, which is useful for a business that is still loss making.

For Aeva Technologies, this matters because the company is unprofitable, reports a loss of $145.54 million, and also has negative shareholders' equity. In that context, traditional ratios can be difficult to interpret, so an explicit cash flow based framework offers one way to compare the current $1.34b market value with long run cash generation assumptions.

Look into how the SWS DCF model arrives at its fair value.

Result: DCF fair value of $61.92 (UNDERVALUED)

However, sharp share price gains and continued losses of $145.54 million mean Aeva Technologies still carries execution risk if demand for Optical Connectivity or LiDAR disappoints.

Find out about the key risks to this Aeva Technologies narrative.

With both risks and rewards in play for Aeva Technologies, it makes sense to move quickly and weigh the evidence yourself. To see the full balance of potential upsides and concerns, review the 2 key rewards and 5 important warning signs

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include AEVA.

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