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CLS Outpaces Industry in the Past 3 Months: Reason to Buy the Stock? (Revised)
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Key Takeaways
CLS stock jumped 24.3% in 3 months, beating FLEX, JBL and the broader industry's 15.4% gain.
Celestica is riding GenAI momentum with high-speed switches and scalable AI storage platforms.
Earnings estimates for CLS rose 5.7% for 2025 and 2.4% for 2026, signaling bullish sentiment.
Celestica Inc. (CLS - Free Report) has gained 24.3% over the past three months compared with the industry’s growth of 15.4%. It has also outperformed peers like Flex Ltd. (FLEX - Free Report) and Jabil Inc. (JBL - Free Report) . Flex has gained 17.3% and Jabil is up 14.7% over this period.
With more than two decades of experience in manufacturing backed by a simplified and global network, Celestica is committed to delivering next-generation, cloud-optimized data storage and industry-leading networking AI (artificial intelligence) solutions to help customers balance performance, power efficiency and space as technologies evolve. Operating primarily as a behind-the-scenes partner for other electronics businesses, it is among the lesser-known winners of the AI revolution. The Toronto, Canada-based company offers a one-stop shop for the electronics market, encompassing design, manufacturing and supply chain management.
Three-Month CLS Stock Price Performance
Image Source: Zacks Investment Research
GenAI: CLS' Key Growth Driver
Celestica has benefited from the ongoing generative AI (GenAI) boom, thanks to the solid demand trends for AI/ML (machine learning) compute and networking products from hyperscale customers. It has launched a high-performance 800G family of network switches, which are vital for data centers that power AI applications and storage solutions like the SC6100 controller and SD6200 platform (which provide efficient and scalable data storage for AI). This transformational solution provides a foundational technology to advance AI while maintaining scalable, sustainable and profitable business models.
Leveraging such innovative products, the company has recorded solid revenue growth over the years. The data center switches combined with optical transceivers have the potential to handle and sustain high volumes of both inbound and outbound network traffic and cater to the demand for data center bandwidth for supporting AI/ML and data analytics applications.
Image Source: Zacks Investment Research
Estimate Revision Trend
Earnings estimates for Celestica for 2025 have moved up 5.7% to $5.05 over the past 60 days, while the same for 2026 has improved 2.4% to $6.07. The positive estimate revision depicts optimism about the stock’s growth potential.
Image Source: Zacks Investment Research
CLS Remains Skeptical of Macro Environment
Despite the healthy demand trends, Celestica remains skeptical of the dynamic macro environment owing to trade policy uncertainty. While the environment remains fluid with frequent policy adjustments, recent announcements have provided near-term clarity with the U.S. government offering temporary exemptions for key data center IT hardware, including servers and networking switches, which comprise the majority of its Connectivity & Cloud Solutions (CCS) segment. The company is collaborating with its customers to evaluate the evolving policy landscape and take necessary actions, clouding its near-term revenue prospects.
Margin Woes: CLS' Perennial Concerns
Celestica remains plagued by margin woes. Its 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. This has dented CLS’ prospects to some extent.
Moreover, Celestica faces stiff competition from industry giants like Foxconn, Jabil, Flex and Sanmina Corporation. Several smaller companies operating at a regional level also intensify competition. The highly cyclical nature of the semiconductor industry further remains an overhang.
End Note
Celestica is helping customers balance performance, power efficiency and space as technologies evolve. We believe that the company is well-positioned for sustained growth over the years, backed by its robust infrastructure investments, solid technology know-how and wide industry experience.
However, high operating expenses for highly technological products have hurt margins. Although CLS is currently witnessing intense volatility owing to challenging macroeconomic conditions, investors are likely to profit in the long run if they bet on this stock. With a Zacks Rank #3 (Hold), Celestia appears to be treading in the middle of the road, and investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
(We are reissuing this article to correct a mistake. The original article, issued onJune 2, 2025, should no longer be relied upon.)
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CLS Outpaces Industry in the Past 3 Months: Reason to Buy the Stock? (Revised)
Key Takeaways
Celestica Inc. (CLS - Free Report) has gained 24.3% over the past three months compared with the industry’s growth of 15.4%. It has also outperformed peers like Flex Ltd. (FLEX - Free Report) and Jabil Inc. (JBL - Free Report) . Flex has gained 17.3% and Jabil is up 14.7% over this period.
With more than two decades of experience in manufacturing backed by a simplified and global network, Celestica is committed to delivering next-generation, cloud-optimized data storage and industry-leading networking AI (artificial intelligence) solutions to help customers balance performance, power efficiency and space as technologies evolve. Operating primarily as a behind-the-scenes partner for other electronics businesses, it is among the lesser-known winners of the AI revolution. The Toronto, Canada-based company offers a one-stop shop for the electronics market, encompassing design, manufacturing and supply chain management.
Three-Month CLS Stock Price Performance
Image Source: Zacks Investment Research
GenAI: CLS' Key Growth Driver
Celestica has benefited from the ongoing generative AI (GenAI) boom, thanks to the solid demand trends for AI/ML (machine learning) compute and networking products from hyperscale customers. It has launched a high-performance 800G family of network switches, which are vital for data centers that power AI applications and storage solutions like the SC6100 controller and SD6200 platform (which provide efficient and scalable data storage for AI). This transformational solution provides a foundational technology to advance AI while maintaining scalable, sustainable and profitable business models.
Leveraging such innovative products, the company has recorded solid revenue growth over the years. The data center switches combined with optical transceivers have the potential to handle and sustain high volumes of both inbound and outbound network traffic and cater to the demand for data center bandwidth for supporting AI/ML and data analytics applications.
Image Source: Zacks Investment Research
Estimate Revision Trend
Earnings estimates for Celestica for 2025 have moved up 5.7% to $5.05 over the past 60 days, while the same for 2026 has improved 2.4% to $6.07. The positive estimate revision depicts optimism about the stock’s growth potential.
Image Source: Zacks Investment Research
CLS Remains Skeptical of Macro Environment
Despite the healthy demand trends, Celestica remains skeptical of the dynamic macro environment owing to trade policy uncertainty. While the environment remains fluid with frequent policy adjustments, recent announcements have provided near-term clarity with the U.S. government offering temporary exemptions for key data center IT hardware, including servers and networking switches, which comprise the majority of its Connectivity & Cloud Solutions (CCS) segment. The company is collaborating with its customers to evaluate the evolving policy landscape and take necessary actions, clouding its near-term revenue prospects.
Margin Woes: CLS' Perennial Concerns
Celestica remains plagued by margin woes. Its 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. This has dented CLS’ prospects to some extent.
Moreover, Celestica faces stiff competition from industry giants like Foxconn, Jabil, Flex and Sanmina Corporation. Several smaller companies operating at a regional level also intensify competition. The highly cyclical nature of the semiconductor industry further remains an overhang.
End Note
Celestica is helping customers balance performance, power efficiency and space as technologies evolve. We believe that the company is well-positioned for sustained growth over the years, backed by its robust infrastructure investments, solid technology know-how and wide industry experience.
However, high operating expenses for highly technological products have hurt margins. Although CLS is currently witnessing intense volatility owing to challenging macroeconomic conditions, investors are likely to profit in the long run if they bet on this stock. With a Zacks Rank #3 (Hold), Celestia appears to be treading in the middle of the road, and investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
(We are reissuing this article to correct a mistake. The original article, issued on June 2, 2025, should no longer be relied upon.)