CLS Focuses on High-Bandwidth AI Portfolio: A Sign of More Upside?

Celestica Inc.'s (CLS) high-bandwidth switches, such as 400G, 800G, and next-generation 1.6T Ethernet, are essential for quickly moving data between servers, GPUs, and storage in AI and data-center networks. Rapid growth of generative AI and hyperscale cloud infrastructure has translated into a healthy demand for Celestica’s high-bandwidth networking switches for faster and more energy-efficient networks.

Celestica’s 800G Ethernet provides extremely high data speeds, low latency, and better power efficiency, enabling faster communication between servers and GPUs in large AI and cloud data centers. Its next-generation 1.6T Ethernet includes DS6000 and DS6001 switches delivering up to 102.4 Tbps switching capacity designed for high-bandwidth AI and machine-learning clusters. Earlier, Celestica launched Enterprise Campus Access Switch, ES1500, a high-performance 1U switch that offers up to 48× 2.5 GbE ports with optional PoE and 220 Gbps switching capacity, providing a reliable, AI-ready enterprise edge connectivity.

Celestica partners with major cloud providers and tech companies to provide custom, energy-efficient hardware for AI applications. The company’s AI hardware demand is expected to rise in the upcoming years, generating long-term growth for the company, as AI, cloud computing, and data-center growth increase worldwide.

How Are Competitors Advancing?

Celestica faces competition from Jabil, Inc. (JBL) and Flex LTD. (FLEX). Jabil’s recently launched J 422G servers can handle heavy AI tasks, which include machine learning and large models, using multiple powerful GPUs for expandable data-center performance. Jabil’s high-demand AI products include scalable servers, custom data-center hardware, optical components, and advanced cooling solutions supporting modern AI and cloud systems. Jabil is making its AI data center infrastructure stronger to remain competitive in the AI data center market.

Flex’s liquid-cooled servers and racks facilitate advanced cooling to manage heat in powerful AI and high-performance computing systems. Flex provides advanced power products like energy storage systems, converters, and power units to deliver reliable power for high-density AI data centers. Flex Ltd is investing in improving its AI and data-center infrastructure products to handle large-scale AI work pressure.

Celestica's Price Performance, Valuation & Estimates

Celestica’s shares have soared 199.7% over the past year compared with the industry’s growth of 93.7%.

From a valuation standpoint, Celestica trades at a forward price-to-earnings ratio of 35.89, up from the industry average of 24.13.

Earnings estimates for 2025 have increased 6.3% to $5.90 over the past 60 days, while the same for 2026 have also increased 20.9% to $8.20.

Celestica currently 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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