Electronics component designer Celestica ( CLS ) is currently cashing in on the artificial intelligence (AI) boom by supplying tech giants with Ethernet switches and other equipment. The spending trend has turned the tide for Celestica, making it a top 800 Gbps Ethernet supplier that is turning into a leading hyperscale tech giant.
The company also has a long-standing partnership with chip giant Advanced Micro Devices (AMD), which positions it as a beneficiary of AMD’s multi-year collaboration with Meta Platforms (META), where the social media giant is set to spend “double billions” per gigawatt on AMD chips and equipment.
With Celestica stock up 37% over the past six months, does it have any upside left, especially as it cashes in on hyperscalar demand?
Based in Toronto, Canada, Celestica focuses on design, manufacturing, supply chain management, and aftermarket services. It operates a global network of sites, serving industries such as aerospace, defense, telecommunications, enterprise, health tech, industrial, and smart energy.
The company collaborates with top brands to oversee the entire product life cycle, from initial concepts and production to fulfillment and ongoing support. Celestica has a market capitalization of $32.1 billion.
Celestica stock is reaping gains from AI hyperscale demand and strong earnings. Over the past 52 weeks, the stock has grown 157.4%, and over the past six months, it has gained 37.4%. On the other hand, the stock has fallen slightly this year. Shares hit a 52-week high of $363.40 in November 2025, but are down 23.6% from that level.
www.barchart.com
On a previously adjusted basis, Celestica’s price-to-earnings ratio of 35.21x is higher than the industry average of 22.26x.
On January 28, Celestica reported strong fourth-quarter results for fiscal 2025, which beat its expectations by a healthy margin. The company’s revenue increased 43.6% year-over-year (YOY) to $3.65 billion, from its guided $3.33 billion to $3.58 billion.
Connectivity and Cloud Solutions (CCS), which includes its communications and enterprise (servers and storage) end markets, did the heavy lifting, generating $2.86 billion in revenue. The segment’s margin was 8.4%, up from 7.9% in the prior-year period. Celestica’s non-GAAP EPS was $1.89, up 70.3% YOY and above the company’s $1.65 to $1.81 guidance range.
Celestica’s hotter-than-expected results led the company to raise its current-year outlook. It raised its 2026 revenue outlook to $17 billion from $1 billion, while its adjusted EPS outlook rose to $8.75 from $8.20.
Additionally, the company envisions helping its major customers with their long-term AI investments with a multi-year capability roadmap. Celestica plans to expand its manufacturing capacity in the United States (scheduled for completion in 2027) to strengthen its ability to support the production of complex data center hardware, including Google Tensor Processing Unit (TPU) systems. Therefore, it is not surprising that it is expected to incur higher capex this year, approximately $1 billion, or about 6% of the current annual revenue outlook.
Wall Street analysts are bullish on Celestica’s bottom line. For the current quarter, its EPS is expected to grow by 96% YOY to $1.96. For fiscal 2026, the company’s EPS is projected to increase 49.9% annually to $8.35, and for fiscal 2027 to increase 45% to $12.11.
After Q4 earnings, analysts at Barclays maintained an “overweight” rating on Celestica stock and raised their price target to $391 from $359. In addition, analysts said the upward revision of the company’s revenue outlook is conservative and that there could be further revisions this year.
They are also positive about the company’s growing exposure to high-growth end markets dependent on next-generation computing infrastructure. On the other hand, Citigroup analyst Atif Malik lowered his price target to $338 from $375, while maintaining a “buy” rating.
Celestica is getting praise on Wall Street, with analysts giving it an overall consensus “Strong Buy” rating. Out of 18 analysts rating the stock, 15 have given it a “Strong Buy” rating, one analyst has rated it a “Moderate Buy”, while two analysts have a middle of the road rating with a “Hold” rating. The consensus price target of $361.40 represents a 30.2% upside from current levels. A high street price target of $430 implies a 54.9% upside.
www.barchart.com
www.barchart.com
As of the date of publication, Anushka Dutta had no position (either directly or indirectly) in any of the secrets mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com
