Is CLS a good stock to buy? We came across a bullish thesis on Celestica Inc. on Beating The Tide’s Substack by George Atuan, CFA. In this article, we will summarize the bulls’ thesis on CLS. Celestica Inc.’s share was trading at $401.12 as of April 20th. CLS’s trailing and forward P/E were 56.02 and 44.64 respectively according to Yahoo Finance.
Celestica Inc., together with its subsidiaries, provides supply chain solutions in Asia, North America, and internationally. CLS delivered a standout Q4 2025, reporting revenue of $3.6 billion (+44% y/y), EPS of $1.89 (+70%), and record profitability with 7.7% operating margins and 43.1% ROIC, yet the stock fell ~15%, creating what appears to be a mispricing opportunity.
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Growth continues to be driven by its Connectivity & Cloud Solutions (CCS) segment, which now accounts for 78% of revenue and grew 64%, fueled by hyperscaler demand for AI infrastructure, including 800G networking and next-generation compute programs. The company also confirmed its strategic partnership with Google remains intact, positioning Celestica as a key manufacturing partner for TPU systems, while recent concerns about order shifts were clarified as capacity-driven rather than demand weakness.
A major focus is the company’s aggressive $1 billion capex plan for 2026, a fivefold increase aimed at expanding global production capacity to meet strong, visible demand. While this raised investor concerns, management emphasized that the investment is backed by committed customer demand and will be funded through operating cash flow, supported by strong free cash generation and high returns on capital. Additionally, Celestica raised its 2026 outlook to $17 billion in revenue, implying continued strong growth, particularly in AI-driven segments, despite conservative guidance assumptions around potential supply constraints.
Fears around slowing growth, AI capex fatigue, and customer concentration appear overstated, as hyperscaler demand remains robust and long-term AI infrastructure investment continues to accelerate. With consistent execution, expanding margins, and strong customer alignment, Celestica remains well-positioned to benefit from a multi-year AI supercycle, making the recent stock decline appear disconnected from underlying fundamentals.
Previously, we covered a bullish thesis on Celestica Inc. (CLS) by OrangeEveryday in March 2025, which highlighted the company’s role in electronic manufacturing, consistent demand for technological upgrades, and risks around customer concentration and macro pressures. CLS’s stock price has appreciated by approximately 347.77% since our coverage. George Atuan, CFA shares a similar view but emphasizes on AI-driven growth, hyperscaler demand, and capacity expansion.
Celestica Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 71 hedge fund portfolios held CLS at the end of the fourth quarter which was 62 in the previous quarter. While we acknowledge the risk and potential of CLS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CLS and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
