Celestica Inc. (NYSE:CLS) has already had a remarkable year. The interesting part is that the company doesn’t seem to be slowing down. Its second-quarter revenue jumped 62% year over year, while adjusted EPS rose 83%. Management subsequently raised its 2026 outlook and said revenue growth should accelerate again in 2027.
The bigger story, though, isn’t one strong year. Celestica is becoming more important to the architecture of AI infrastructure.
For years, it was easier to think of Celestica as a sophisticated manufacturer. Customers designed products, and Celestica helped turn those designs into large-scale production. That remains part of the business, but the company is increasingly involved much earlier in the process.
Its engineers are helping design complex systems, and then Celestica is responsible for getting those systems into production. Management believes that combination is helping it win market share because customers increasingly value companies that can both design and manufacture complicated infrastructure reliably at scale.
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That matters as AI data centers become more complicated.
The industry is moving from simply buying more accelerators to building entire systems around them. Networking speeds are moving from 800G toward 1.6T, while hyperscalers are developing increasingly customized AI infrastructure. Celestica is sitting directly in that transition.
The company expects its 1.6T networking programs to ramp significantly in 2027. It is also preparing to deliver custom racks for OpenAI, while its AMD Helios opportunity is expected to ramp in the first half of next year. Management describes both as multibillion-dollar opportunities.
This is where the 2027 story gets interesting.
Celestica Inc. is currently valued at about 18.5 times forward earnings, while consensus expectations call for roughly 75% EPS growth next year. On its own, a low forward P/E doesn’t mean much. But when earnings are still expanding that quickly, the valuation starts to look considerably less demanding.
There is a catch. Investors are no longer paying for an undiscovered company. Expectations have risen sharply, and the business remains dependent on a handful of very large customers. Three customers accounted for 32%, 17% and 14% of Q2 revenue. Celestica is also spending heavily to expand capacity, with roughly $1 billion of capital expenditures planned for 2026.
So the risk isn’t that Celestica lacks growth. It is that the growth eventually becomes harder to sustain.
The bottom line
For now, the demand picture remains unusually strong. Management says customers are already discussing requirements for 2027, 2028 and even 2029, while component shortages are forcing them to plan far ahead.
That makes Celestica’s upcoming October 27 investor day particularly important. Investors should get a better look at how much of this growth can continue beyond 2027.
Celestica isn’t just riding the AI spending wave anymore. It is becoming part of the machinery that allows that spending to happen. If its design capabilities, customer relationships, and manufacturing scale keep translating into new programs, 2027 could look less like the peak of a boom and more like another step up.
Market Sentiment
Hedge fund interest in Celestica weakened slightly in Q2. The number of hedge funds holding the stock fell from 67 in Q1 to 63 in Q2 in the Insider Monkey database, while the total value of their positions increased from approximately $4.38 billion to $4.84 billion. That points to mixed sentiment, with fewer funds holding the stock but larger aggregate positions among those that remained invested.
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This article is originally published at Insider Monkey.
