Bull of the Day: Celestica Inc. (CLS)

Celestica Inc. CLS is an electronics manufacturing services giant riding the artificial intelligence spending boom to new highs and posting massive earnings and revenue growth.

CLS stock has soared ~4,200% in the past five years, crushing Nvidia and tons of other standout AI stocks, on its way to breaking out meaningfully above its previous dot-com bubble peaks. Despite its climb, Celestica’s average Zacks price target implies 33% upside from its current price.

The AI stock is also finding support at key short-term and long-term technical levels, having already cooled substantially since early June.

Celestica, which helps build and assemble complex electronics and tech hardware for AI hyperscalers and others, is projected to more than double its revenue and adjusted earnings between FY25 and FY27.

The AI technology infrastructure maker’s surging earnings revisions land CLS a Zacks Rank #1 (Strong Buy).

Wall Street is bullish on Celestica (16 of 19 brokerage recommendations Zacks has are Strong Buys) given its upside potential across the capex-heavy AI arms race. Plus, CLS trades at a 50% discount to its highs in terms of forward earnings.

Investors looking to buy top-ranked AI stocks heading into July and the second half of 2026 should consider Celestica for staggering sales and earnings growth, value, and breakout potential. 

Best AI and Tech Stocks to Buy Now and in July: CLS

Celestica is an electronics manufacturing services company that builds and assembles complex electronics and tech hardware for big customers across. CLS is expanding its reach in critical areas of the economy with long-term upside, especially AI data centers, telecom and networking equipment, semiconductor manufacturing, and beyond.

The Toronto, Canada-based contract manufacturer designs, builds, and tests things like servers, storage systems, networking gear, and other electronics that power data centers, AI infrastructure, telecommunications, and industrial equipment.

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Celestica is a high-tech picks-and-shovels way for investors to buy into the AI age and beyond, since hyperscalers and other giants across tech rely on Celestica to handle their technology manufacturing, so they can focus on innovation.

CLS operates two reportable units: Advanced Technology Solutions (ATS) and Connectivity & Cloud Solutions (CCS). Celestica’s services across these segments include Design and Engineering, Manufacturing Services, Logistics and Fulfillment, Precision Machining, Product Licensing Services, and beyond.

The company’s product offerings span storage, compute, networking, and software. Celestica’s AI data center-focused business is booming as demand soars across its servers and storage businesses.

Celestica expects its business to keep growing faster through the rest of 2026. The firm is already ramping up production of its 800G networking equipment for AI data center customers. It’s also making sure that it keeps pressing forward to stay at the leading edge of AI innovation.

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CLS said earlier this year that it will begin building even more advanced 1.6T equipment for two AI Hyperscalers. Celestica’s newest tech represents a “doubling of switch capacity compared to Celestica’s existing, market-leading 800G solutions…” and provides a “comprehensive set of AI routing features and interconnect options, designed to meet the demands of AI clusters.”

Celestica’s new, higher-speed solutions are projected to drive strong growth as it wins more business. The AI tech infrastructure firm said that its enterprise AI/ML (artificial intelligence and machine learning) compute segment is projected to “ramp through 2026,” with CLS expecting “strong momentum continuing into 2027, supported by next-generation programs.”

The Picks-and-Shovels AI Stock’s Staggering Growth and Outlook  

Celestica, which went public in the late 1990s, transformed from a struggling electronics manufacturing services firm into a critical cog in the AI data center boom and the broader capex-heavy spending spree spanning from chip manufacturing to defense spending.

CLS’s top- and bottom-line growth has gone into overdrive as it benefits from a multi-year upgrade cycle for AI data centers, with customers flocking to its existing, market-leading 800G solutions and its next-generation 1.6T offerings that double the switch capacity.

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AI hyperscalers alone are projected to spend $600 billion to $800 billion in capex in 2026, up from roughly $400 billion in 2025. New reports predict that AI hyperscaler capex will hit $1.1 trillion in 2027. 

The technology company averaged 22% revenue growth between FY22 and FY25 to soar from $5.6 billion in 2021 to $12.39 billion in FY25. The tech manufacturer grew its GAAP earnings from $0.83 a share in 2021 to $7.16 in 2025, breaking out of a nearly two-decade slump in the process as it reached a profitability inflection point.

The firm late last year highlighted some of its recent big customer wins, including a “1.6 Terabyte switching program with a second Hyperscaler customer…. supporting the customer with the design and production of a fully AI-optimized networking rack.” AI Hyperscalers include Meta, Amazon, Microsoft, and other technology giants.

Celestica posted a beat-and-raise Q1 report in mid-April, driven by “accelerating growth” from its Connectivity & Cloud Solutions customer base. Its adjusted earnings estimates have climbed by 14% for 2026 and 2027 in the past several months, landing Celestica a Zacks Rank #1 (Strong Buy), and extending its stretch of upward revisions.

CLS said that its 2027 outlook “continues to strengthen,” based on “new program wins as well as improved forecast visibility with our customers.”

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The tech company is projected to grow its revenue by 54% in 2026 and another 38% in 2027 to reach $26.25 billion, doubling 2025’s $12.39 billion in the process. It is also projected to more than double its adjusted earnings during this stretch, based on our most recent Zacks estimates.

Celestica is expected to expand its adjusted earnings per share by 68% in 2026 and 44% in 2027 to climb from $6.05 a share in 2025 to $14.60 next year. The chart above highlights Celestica’s impressive earnings growth outlook over the next several years.

Buy CLS for AI Growth, Value, and July Breakout Potential

Celestica stock has skyrocketed ~4,200% in the past five years to crush Nvidia’s NVDA ~870%, peer Jabil’s 540%, and its highly ranked Electronics - Manufacturing Services industry’s 666%. Electronics - Manufacturing Services, which includes Jabil JBL and others, ranks in the top 11% of roughly 250 Zacks industries.

Studies have shown that roughly half of a stock's price movement can be attributed to a stock's industry group. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.

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The stock meaningfully overtook its dot-com bubble peaks in late 2024 and 2025 and hasn’t looked back since. CLS has climbed ~3,500 in the past decade, topping JBL’s ~1,900% and Tech’s 500%, including a 120% surge in the past 12 months.

Thankfully for investors who missed this run, Celestica stock has dropped over 25% from its early June highs. And its average Zacks price target represents 33% upside from Monday’s levels.

CLS found some technical support at the bottom of its key short-term technical range (its April breakout levels and its recent lows). It has also fallen from overbought RSI levels to nearly oversold in the past several weeks. Longer-term, CLS found support at its 21-week moving average.

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On the valuation front, Celestica stock trades at a roughly 50% discount to its recent highs at 28.9X forward 12-month earnings, and not too far above its industry’s 24.9X, despite outperforming it by over 5X in the last five years. Plus, CLS trades at 1.7X forward 12-month sales, marking 75% value vs. the Zacks Tech sector and 66% value compared to the S&P 500. 

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

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