When Alphabet (NASDAQ:GOOGL | GOOGL Price Prediction) announced 2026 capital expenditure guidance of $175-$185 billion during its Q4 2025 earnings call on February 4, th, it represented a 97% year-over-year increase in spending. CEO Sundar Pichai called it a “tremendous quarter” with annual revenues exceeding $400 billion for the first time, but the real story is where that money’s going: data centers, AI compute, and physical infrastructure powering machine learning.
Celestica (NYSE:CLS) manufactures the hardware Google and other hyperscalers need to turn those billions into functioning data centers: Google Tensor Processing Unit systems, next-generation networking switches, and full-rack AI infrastructure. The stock has climbed 108% over the past year, and Google’s spending blitz suggests momentum has room to run.
Why Celestica Wins From Google’s AI Infrastructure Arms Race
CEO Rob Mionis made the relationship clear on the company’s Q4 2025 earnings call in late January:
“We are proud of our decade-long partnership with Google and are excited to continue supporting the acceleration of leading AI data center architecture. […] As a preferred manufacturing partner for Google’s Tensor Processing Unit, or TPU systems, Celestica is committed to making long-term investments in both capacity and capabilities both in the United States and across our global footprint.”
Celestica is expanding manufacturing capacity in Texas and Thailand, adding over 700,000 square feet in the U.S. and 1 million square feet in Thailand. The company announced 2026 capital expenditures of approximately $1 billion, all funded through operating cash flow, for what CFO Mandeep Chawla called “record bookings” and “meaningfully improved long-term demand visibility.”
Celestica’s Connectivity & Cloud Solutions segment grew 64% year-over-year in Q4 2025, driven by 800G networking switches. The company is ramping 1.6T switching programs in the latter part of 2026, with 10 active programs in the pipeline.
For 2026, Celestica guided to $17 billion in revenue, representing 37% year-over-year growth, with adjusted EPS of $8.75, up 45%. The stock sold off on that guidance, but it’s likely the guidance was extremely conservative.
The Year Ahead
Those projections came before Google’s $185 billion CapEx announcement. Analysts expected closer to $116 billion. That gap represents tens of billions in incremental infrastructure spending that Celestica is positioned to capture. Mionis told investors that visibility into 2027 is “unprecedented,” with the CCS segment now expected to grow close to $7 billion in 2027, up from prior estimates of $5 billion three months earlier.
Celestica trades at 34x forward earnings, which looks expensive until you consider the company posted 100% year-over-year earnings growth while expanding margins. Wall Street sees it: 16 of 18 analysts rate the stock Buy or Strong Buy, with a consensus target of $386. If Google follows through on this spending, Celestica isn’t just along for the ride; it’s building it.
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