Buoyed by a holistic growth model, Celestica Inc. CLS was trading at $92.08 – near its 52-week high of $93.15 – at the close of trading hours yesterday. The stock has gained a stellar 245.5% over the past year compared with the industry’s growth of 57.2%, outperforming peers like Flex Ltd. FLEX and Jabil Inc. JBL.
Boasting more than two decades of experience in manufacturing, Celestica is among the lesser-known winners of the AI (artificial intelligence) revolution. Supported by a simplified global network, the company is committed to delivering next-generation, cloud-optimized data storage and industry-leading networking solutions to help customers balance performance, power efficiency and space as technologies evolve.
CLS Stock One-Year Price Performance Comparison
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Solid Portfolio Traction Aids CLS
With a diverse portfolio of products that form an integral part of AI applications, Celestica’s remarkable transformation in recent years offers a competitive edge across the broader technology market. The company has benefited from the ongoing generative AI boom, thanks to the solid demand trends for AI/ML (machine learning) compute and networking products from hyperscale customers.
In addition to the high-performance 800G family of network switches (which are vital for data centers that power AI applications) and storage solutions like the SC6100 controller and SD6200 platform (which provide efficient and scalable data storage for AI), Celestia offers Photonic Fabric – an optical compute and memory fabric solution capable of supercharging AI infrastructure. This transformational solution provides a foundational technology to advance AI while maintaining scalable, sustainable and profitable business models.
By integrating next-generation networking products with silicon photonics packaging solutions, Celestica aims to optimize supply chain solutions to reduce time to market. The data center switches combined with optical transceivers have the potential to handle and sustain high volumes of both inbound and outbound network traffic and cater to the demand for data center bandwidth for supporting AI/ML and data analytics applications.
DS4100 – the latest addition to the Hardware Platform Solutions portfolio, featuring a 1U 800G per port top-of-rack leaf/spine switch – has also garnered customer interest. The product caters to the high-bandwidth demands of data center networking across the enterprise, service provider and cloud provider domains. Designed with Broadcom Inc. AVGO TH4-12.8T switch chipset, it offers a comprehensive 800G data center switch lineup for demanding applications with the redundancy and flexibility required of modern data centers. Such state-of-the-art portfolio additions have helped the company to record healthy top-line growth over the past few years.
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Celestica Aims for Economies of Scale
With the proliferation of AI-based applications and generative AI tools, business enterprises are increasingly forced to scale future computing platforms to address the burgeoning AI workloads with low-power, high-bandwidth data transfer. This, in turn, is leading to an exponential growth in I/O bandwidth.
To strengthen its market-leading position of AI-enabled products, Celestia is currently developing more than 100,000 square feet of additional capacity in Thailand. Moreover, it is adding 80,000 square feet of incremental capacity in Malaysia to augment its production capabilities. Celestia is also working with industry leaders to commercialize technologies such as On-Board Optics and Co-Packaged Optics to address the demand for speed and cost-efficiency amid the evolving technology landscape.
Earnings Estimate Revision Trend of CLS
Earnings estimates for Celestia for 2024 have increased 40.5% to $3.85 over the past year, while the same for 2025 has improved 32.6% to $4.43. The positive estimate revision depicts optimism about the stock’s growth potential.
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End Note
As the company scales up production volumes and costs decrease, possible uses for silicon photonics and network switches are likely to soar across several industries, including automotive, data center and high-performance computing, telecommunications, medical, aerospace and defense. This, in turn is expected to fuel incremental demand for CLS products, boosting the stock further.
The stock delivered a trailing four-quarter average earnings surprise of 13.2%. Celestia currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Riding on a robust earnings surprise history and favorable Zacks Rank, it appears primed for further stock price appreciation. Consequently, investors are likely to profit if they bet on this high-flying stock now.
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