Can Celestica Maintain Healthy Revenue Growth With an AI Focus?

Celestica Inc. CLS boasts a diverse portfolio of products that are integral to AI (artificial intelligence) applications. With more than 25 years of experience in manufacturing backed by a simplified and optimized global network, it 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. This has helped the company record healthy revenue growth over the years.

The growing proliferation of AI-based applications and generative AI tools across industries presents a solid growth opportunity for Celestica. AI investments are 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. To further capitalize on this trend, Celestica is steadily expanding its offering through innovation and strategic collaboration. 

Powered by EPYC Embedded 9004 series processors from Advanced Micro Devices, Celestica SC6100 is a next-generation, 2U rackmount all-flash storage controller designed to deliver superior performance for the most demanding enterprise application workloads. The company has also introduced DS4100, a 1U 800G per port top-of-rack, leaf/spine switch to cater to the high-bandwidth demands of data center networking. The solution is designed with Broadcom’s TH4-12.8T switch chipset. The company expects solid demand for its 400G and 800G switch products, driven by the growing use of high-bandwidth, data-intensive AI applications.

Some Tech Firms Focusing on AI

Amazon.com, Inc.’s AMZN expansion of its Bedrock platform has positioned it as a frontrunner in the enterprise AI race. Amazon Bedrock has emerged as a game-changing, fully managed service that offers enterprises seamless access to high-performing foundation models from leading AI companies. The platform's recent developments, including automated reasoning checks and multi-agent collaboration capabilities, address critical challenges in AI adoption while opening new revenue streams for Amazon's cloud division.

Microsoft Corporation MSFT is striving to maintain its competitive edge in AI with the introduction of the Agent Store, which creates a new marketplace for AI-powered workplace assistants. The platform features more than 70 agents and provides developers with monetization opportunities through Microsoft 365 Copilot integration. The Azure AI Foundry application and agent development hub has been adopted by developers at more than 70,000 enterprises and digital-native companies. Microsoft's Azure AI Agent Service has been utilized by more than 10,000 organizations to build, deploy and scale agents.

CLS’ Price Performance, Valuation and Estimates

Celestica has surged 409.7% over the past year compared with the industry’s growth of 141.6%.

From a valuation standpoint, CLS trades at a forward price-to-sales ratio of 2.23, above the industry tally of 0.91.

The Zacks Consensus Estimate for CLS’ earnings for 2025 has been on the rise (up 9.5%) over the past 60 days.

Celestica sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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

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