CLS vs. ASTS: Which Technology Stock Suits Your Risk Profile?

Celestica Inc. CLS and AST SpaceMobile, Inc. ASTS are two major players in the technology sector with key expertise in their respective domains. Celestica is one of the largest firms in the electronics manufacturing services (EMS) industry, primarily serving original equipment manufacturers, cloud-based and other service providers and business enterprises across several industries. It offers a comprehensive range of manufacturing and supply-chain solutions that support various customer requirements, from low-volume, high-complexity custom products to high-volume commodity products.

AST SpaceMobile is building the world’s first and only global cellular broadband network in space, accessible directly by standard smartphones (4G-LTE/5G devices) for commercial and government use, leveraging its extensive Intellectual Property and patent portfolio. The SpaceMobile Service is provided by a constellation of high-powered, large phased-array satellites in low Earth orbit (LEO) using low-band and mid-band spectrums controlled by Mobile Network Operators (MNOs) in areas lacking terrestrial network coverage.

Let us delve a little deeper into the companies’ competitive dynamics to understand which of the two is relatively better placed in the broader industry.

The Case for Celestica

With more than two decades of experience in manufacturing, backed by a simplified and optimized global network, Celestica 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. The growing proliferation of AI-based applications and generative AI tools is fueling solid AI investments across the technology ecosystem. This, in turn, is driving demand for Celestica’s enterprise-level data communications and information processing infrastructure products, such as routers, switches, data center interconnects, edge solutions and servers and storage-related products.

Celestica’s focus on product diversification and increasing its presence in high-value markets is positive. Its strong research and development foundations allow it to produce high-volume electronic goods and highly complex technology infrastructure products for a wide range of industries, including communication, healthcare, aerospace and defense, energy, semiconductor and various cloud-based and other service providers. Such a diverse customer base enhances business resilience by reducing dependence on a single industry and minimizing the effects on financial results from an economic downturn in a specific sector.

However, the company remains plagued by margin woes. Celestica’s products are highly sophisticated and typically based on the latest technological innovations, which have historically led to high research and development costs. High operating expenses have contracted margins. Moreover, besides Jabil, Celestica faces stiff competition from industry giants like Foxconn, Flex and Sanmina Corporation SANM. The highly cyclical nature of the semiconductor industry further remains an overhang, particularly in the aftermath of the tariff war.

The Case for AST SpaceMobile

AST SpaceMobile has deployed its first five commercial satellites (dubbed Bluebird) in LEO, marking a key advancement in developing a space-based mobile network infrastructure. These satellites have the largest-ever commercial communications arrays spanning 693 square feet. They offer non-continuous service across the United States using more than 5,600 cells within the premium low-band spectrum.  This achievement follows the success of the company's in-orbit BlueWalker 3 satellite, creating a space-based cellular broadband network that can directly link with mobile devices, eliminating the need for ground-based infrastructure. It plans to deploy 45 to 60 satellites into orbit by the first quarter of 2026. The company boasts a diverse portfolio of more than 3,650 patents and patent-pending claims worldwide for the direct-to-cell satellite ecosystem from space to Earth. 

The SpaceMobile service is compatible with all major brands available in the market and connects directly to everyday mobile phones. It delivers broadband connectivity from space to unmodified mobile devices, providing a service to fill cellular coverage gaps in a differentiated approach compared to other space-based communication services. AST SpaceMobile has partnered with leading carriers such as AT&T Inc. T and Verizon Communications Inc. VZ to tap into a pre-existing pool of cell customers and raise funds to help build a worldwide satellite network. This has enhanced cellular coverage in the United States, essentially eliminating dead zones and empowering remote areas of the country with space-based connectivity.

However, unfavorable macroeconomic conditions, including rising inflation, higher interest rates, capital market volatility, tariff imposition and geopolitical conflicts, are negatively impacting the company’s operations. These have led to continued fluctuations in satellite material prices, resulting in increased capital costs and pressure on the company’s financial performance. In addition, AST SpaceMobile faces severe competition from existing and new industry leaders like SpaceX’s Starlink and Globalstar, which are developing satellite communications technology using LEO constellations. To combat such competitive pressure, ASTS has to continuously customize its network offerings, enhance the cost-effectiveness of its products and services and boost its satellite data networks, which increases operating costs and reduces margins.

How Do Zacks Estimates Compare for CLS & ASTS?

The Zacks Consensus Estimate for Celestica’s 2025 sales and EPS implies year-over-year growth of 20.6% and 43%, respectively. The EPS estimates have been trending northward (up 9.9%) over the past 60 days.

The Zacks Consensus Estimate for AST SpaceMobile’s 2025 sales implies year-over-year growth of 1,120%, while that of EPS suggests a decline of 48.5%. The EPS estimates have been trending northward (up 2%) over the past 60 days.

Price Performance & Valuation of CLS & ASTS

Over the past year, Celestica has gained 424% compared with the sector’s growth of 30.1%. AST SpaceMobile has gained 29.8% over the same period.

Celestica looks more attractive than AST SpaceMobile from a valuation standpoint. Going by the price/sales ratio, AST SpaceMobile’s shares currently trade at 69.34 forward sales, significantly higher than 2.13 for Celestica.
 

CLS or AST SpaceMobile: Which is a Better Pick?

While Celestica sports a Zacks Rank #1 (Strong Buy), AST SpaceMobile has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

Both Celestica and AST SpaceMobile expect sales to improve in 2025, although the latter’s growth expectations far exceed those of the former. However, AST SpaceMobile expects earnings to decline year over year. Celestica has shown sharp revenue and EPS growth over the years, while AST SpaceMobile has been facing a bumpy road. Celestica boasts a better price performance with comparatively more attractive valuation metrics. Consequently, Celestica seems to be a better investment option at the moment in the match-up between two contrasting players – an established EMS/hardware manufacturing player vs a high-risk space connectivity startup.

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This article originally published on Zacks Investment Research (zacks.com).

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