Stock Analysis

Will Surging AI Infrastructure Demand Reshape Celestica's (TSX:CLS) Long-Term Growth Narrative?

  • In recent weeks, Celestica's financial results have exceeded consensus expectations, reflecting strong earnings growth and a rise in demand for advanced networking and AI infrastructure from hyperscaler clients.
  • This surge in performance has heightened attention on Celestica's Connectivity & Cloud Solutions segment, which is benefiting from an accelerated technology rollout in the AI and data center space.
  • We'll explore how the strong earnings momentum linked to AI infrastructure demand impacts Celestica's long-term growth outlook.

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Celestica Investment Narrative Recap

To be a shareholder in Celestica, you need to believe in the company’s ability to capture sustained growth from hyperscaler and AI-driven demand, particularly through its Connectivity & Cloud Solutions segment. Recent earnings results that surpassed consensus estimates reinforce the short-term catalyst of accelerated AI infrastructure spending, but the major risk remains Celestica’s high dependence on a handful of large hyperscaler customers, leaving revenue vulnerable if these clients scale back or switch suppliers; the latest news does not materially change this risk profile.

Of the recent developments, Celestica's Q2 2025 results stand out: with $2.89 billion in sales and $211 million in net income, both notably higher year-over-year. This robust report supports optimism around near-term growth fueled by AI infrastructure rollouts and highlights the company’s current operating leverage, even as future diversification outside the CCS segment remains a concern.

Yet, despite impressive growth, investors should not overlook the concentration risk, a sudden slowdown in hyperscaler capital expenditure could have an outsized effect on Celestica’s fortunes…

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

Celestica's outlook anticipates $17.4 billion in revenue and $992.0 million in earnings by 2028. This projection is based on a 17.9% annual revenue growth rate and an increase in earnings of $453.6 million from the current $538.4 million.

Uncover how Celestica's forecasts yield a CA$362.34 fair value, a 10% upside to its current price.

Exploring Other Perspectives

TSX:CLS Community Fair Values as at Oct 2025
TSX:CLS Community Fair Values as at Oct 2025

Nineteen unique fair value estimates from the Simply Wall St Community span from CA$55 to CA$372 per share. While many are bullish on AI-linked growth, differing analyses stress the importance of diversification beyond top customers; explore other viewpoints for a broader perspective.

Explore 19 other fair value estimates on Celestica - why the stock might be worth as much as 13% more than 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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