Did Celestica's (TSX:CLS) New 1.6TbE Switches Just Redefine Its AI Infrastructure Narrative?

• Earlier this month, Celestica Inc. announced the introduction of the DS6000 and DS6001, two new high-capacity 1.6TbE data center switches engineered for AI and machine learning applications, both leveraging the advanced Broadcom Tomahawk 6 chipset and offering up to 102.4Tbps of switching capacity.
• The DS6000 and DS6001 switches represent a doubling of Celestica's switch capacity compared to its prior 800G solutions and are aimed at meeting growing demand for AI infrastructure in hyperscale data centers.
• We'll examine how Celestica's launch of next-generation data center switches could influence its investment narrative and prospects in AI infrastructure.

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Celestica Investment Narrative Recap

To be a Celestica shareholder, you need to believe in the continued surge in AI and hyperscaler infrastructure demand, with the company capturing market share via rapid product innovation. The recent launch of the DS6000 and DS6001 1.6TbE data center switches bolsters Celestica’s leadership in advanced networking, which could reinforce the most important short-term catalyst, large customer AI buildouts, while also highlighting the execution risk around major technology transitions. However, should customer spending pause or product ramps stall, volatility could increase.

Recent commentary from RBC Capital Markets is particularly relevant, as they cited continual strength in AI-driven demand and noted Celestica’s growing pipeline of hyperscaler wins as a factor supporting margin expansion through 2026-2027. The new switches align well with customer capital expenditure trends, where planned expansions by key accounts like Google and Amazon drive both opportunity and reliance on a handful of large customers for the bulk of revenue.

But while growth has looked robust, be aware the risk for shareholders is magnified when a few customers...

Read the full narrative on Celestica (it's free!)

Celestica's narrative projects $17.4 billion in revenue and $992.0 million in earnings by 2028. This requires 17.9% yearly revenue growth and a $453.6 million earnings increase from $538.4 million today.

Uncover how Celestica's forecasts yield a CA$402.69 fair value, a 6% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members have provided 19 fair value estimates for Celestica ranging from CA$58 to CA$403. With a large portion of revenue hinging on hyperscaler spending, individual expectations can vary widely, so you may want to compare several viewpoints.

Explore 19 other fair value estimates on Celestica - why the stock might be worth less than half the current price!

Build Your Own Celestica Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Celestica research is our analysis highlighting 2 key rewards that could impact your investment decision.
• Our free Celestica research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Celestica's overall financial health at a glance.

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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.

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