The Single Biggest Reason to Buy Celestica Ahead of July 27 Q2 Earnings
Celestica is reporting Q2 earnings on July 27, and the setup heading into that print raises a question most investors have not asked yet: what happens when a pick-and-shovel AI play trades at a discount to its own growth rate…
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Celestica (NYSE:CLS | CLS Price Prediction) is one of the most direct ways for a long-horizon portfolio to gain exposure to the AI infrastructure buildout right now. The company designs and manufactures electronics and hardware for major technology customers, earning revenue by building products such as servers, networking equipment, and data-center systems.
The company is compounding revenue north of 50% with expanding margins, management has raised full-year guidance twice in six months, and the stock trades at a forward multiple below its growth rate. This is a pick-and-shovel play with visible 2027 program wins already booked.
Celestica’s AI Growth Is Accelerating
Q1 FY26 revenue hit $4.05 billion, up 52.8% year over year, with adjusted EPS of $2.16 beating the $2.08 consensus. That was the fifth straight EPS beat. Adjusted operating margin printed 8.0%, a company record, and the Connectivity & Cloud Solutions segment grew 76% year over year to $3.24 billion. Management raised FY26 guidance to $19.0 billion in revenue and $10.15 in adjusted EPS, up from $17.0 billion and $8.75 just one quarter earlier.
The Valuation Has Not Caught Up With the Growth
At $335.50, CLS trades at a forward P/E of 30 against quarterly earnings growth of 147.3% year over year. The Street consensus target sits at $448, with 20 of 21 analysts rating it Buy or Strong Buy and zero Sells. The stock is still trading roughly 30% below its 52-week high of $474.02, giving new buyers a discount to a name that returned 113.82% over the past year.
Why Celestica Is Crushing Its EMS Peers
Flex (NASDAQ:FLEX) and Jabil (NYSE:JBL) are the obvious EMS (Electronics Manufacturing Services) alternatives, and neither is keeping up. Flex grew FY26 revenue just 8.14% to $27.9 billion with an adjusted operating margin of 6.5% in its most recent quarter. Jabil’s Q3 FY26 revenue rose 11.8% year over year against a full-year core operating margin guide of 5.8%.
Celestica is growing more than four times faster than Flex and posting a stronger margin profile roughly 200 basis points above Jabil’s.
Customer Concentration Is Fueling the AI Opportunity
Customer concentration is one of the standard talking points among bears. Three customers were 36%, 15%, and 12% of Q4 FY25 revenue, meaning they cumulatively accounted for 63% of revenue.
Those customers are hyperscalers with published capex trajectories, and CLS just won a Co-packaged Optics Ethernet switch program using 1.6 Terabit silicon that begins ramping in 2027, alongside expanded U.S. manufacturing capacity for Google TPU systems. While customer concentration introduces risk, it also provides a tailwind when the customer list includes the largest AI spenders on earth.
Celestica Deserves a Spot at the Top of Your AI Watchlist
Long-term investors seeking direct AI infrastructure exposure at a reasonable multiple might consider putting Celestica at the top of their research list today. Celestica is scheduled to release Q2 earnings after the market closes on July 27.
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Thomas Richmond is a financial writer and content strategist with 5+ years of experience covering stocks and financial markets. He has published over 250 articles focused on individual stock analysis, helping investors better understand business fundamentals, stock valuations, and long-term opportunities.
Thomas previously served as a Content Lead at TIKR, a stock research platform, where he helped scale the company’s blog to hundreds of articles per month and contributed to a weekly newsletter reaching more than 100,000 investors.
He specializes in breaking down complex companies into clear, actionable insights for everyday investors, with a focus on fundamentals-driven research.
His work has also been featured on platforms including Seeking Alpha and Sure Dividend.
Outside of work, Thomas enjoys weight lifting and soccer.
