Celestica Boosts Portfolio With Twin Launches: Stock to Benefit?

Celestica Inc. CLS has launched two data center switches to cater to the evolving demands of AI networking, doubling the switch capacity of its existing market-leading 800G solutions. Based on the Tomahawk 6 Ethernet switch chip from Broadcom Inc. AVGO, the switches are designed to meet the extreme bandwidth and low-latency demands of modern AI/ML workloads, offering a comprehensive set of AI routing features and interconnect options. 

The 1.6TbE data center switches, the DS6000 and DS6001, support an open-source Network Operating System approach that enables production-ready deployment in a multitude of use cases from the data center to the edge. While the DS6000 is a 64-port switch for traditional air-cooled data center installations, the DS6001 is a 64-port switch designed to operate in a hybrid cooling environment, leveraging a combination of air and liquid cooling techniques. The latest additions to the portfolio of data center switches strengthen Celestica’s position as a leading provider of data center networking, particularly for mission-critical enterprise environments.

Portfolio Strength: CLS' Key Growth Driver

Celestia has benefited from the ongoing generative AI boom, thanks to the solid demand trends for AI/ML and networking products from hyperscale customers. It boasts a diverse portfolio of products that are integral to AI 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.

CLS Focuses on Product Diversification

With the proliferation of AI-based applications and generative AI tools, business enterprises are being increasingly compelled 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.

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 one specific sector.

Price Performance

Celestica has gained a phenomenal 285.9% over the past year compared with the industry’s growth of 30.7%. It has also outperformed peers like Flex Ltd. FLEX and Jabil Inc. JBL over this period. While Flex has gained 59.8%, Jabil was up 54.2% over this period.

One-Year CLS Stock Price Performance

Estimate Revision Trend

Earnings estimates for Celestia for 2025 have moved up 25.3% to $5.55 over the past year, while the same for 2026 has improved 17.1% to $6.78. The positive estimate revision depicts optimism about the stock’s growth potential.

End Note

As the company scales up production volumes and costs go down, its data center switches are likely to be increasingly used across the spectrum, fueling its growth trajectory. Focus on product diversification and strong research and development foundations to cater to the highly complex technology infrastructure product demands are tailwinds.

It delivered a trailing four-quarter average earnings surprise of 7.7%. Celestia currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) 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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This article originally published on Zacks Investment Research (zacks.com).

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