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CLS Q1 Revenues Surge 20% Year Over Year: What's Driving the Growth?
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Key Takeaways
CLS revenues rose 20% YoY in Q1 2025, led by strong traction in Connectivity
Celestica, Inc. (CLS - Free Report) reported a substantial 20% top-line improvement year over year to $2.64 billion in the first quarter of 2025. The company witnessed solid growth in Connectivity & Cloud Solutions segment (“CCS”), driven by healthy demand in the Communications end market. Revenues from High Performance Solutions (“HPS”) product lines were up 99% year over year, backed by strong sales of 400G switches and growing traction for 800G switches from hyperscaler customers.
Growing investments in AI-native applications and generative-AI tools in various sectors are driving demand for Celestica’s data communications and information processing infrastructure products, such as routers, switches, data center interconnects and storage-related products. The company’s strength lies in its focus on innovation. It recently introduced ES1500, an advanced enterprise access switch designed to support modern IT infrastructure with complex and high-density IoT deployments. CLS’ DS4100, a 1U 800G per port top-of-rack, leaf/spine switch, is also gaining traction. The solution, powered by Broadcom’s TH4-12.8T switch chipset, effectively supports the high-bandwidth demands of data center networking.
Despite some macroeconomic uncertainties and growing geopolitical volatilities, Celestica expects strong revenue growth in 2025, driven by strength in AI-data center infrastructure market. Per the Zacks Consensus Estimate, the company expects to generate $10.91 billion in 2025, indicating 13.15% year-over-year growth.
How Are Competitors Faring?
Celestica faces stiff competition from Sanmina Corporation (SANM - Free Report) and Jabil, Inc. (JBL - Free Report) in the electronics contract manufacturing services industry.
In the second quarter of 2025, Sanmina’s Integrated Manufacturing Solutions generated $1.59 billion in revenues, registering 9.7% year-over-year growth. It has a strong presence across multiple end markets, including medical, defense, aerospace, communication, cloud infrastructure, automotive, industrial and energy. Such a diverse market presence strengthens its business resilience by mitigating risks associated with economic downturns in any single industry. Per the Zacks Consensus Estimate, Sanmina is expected to generate $8.1 billion in revenues in 2025, implying 7.02% year-over-year growth.
Jabil is also benefiting from solid growth in the Intelligent Infrastructure segment. The segment reported $3.4 billion in revenues in the May quarter, up 51% year over year. The uptrend is driven by healthy demand in the Capital Equipment, AI-related Cloud and Data Center Infrastructure verticals. Per the Zacks Consensus Estimate, Jabil expects to generate $29.05 billion in revenues in the current fiscal year, indicating 0.59% year-over-year growth.
Celestica's Price Performance, Valuation and Estimates
Celestica shares have gained 165.5% over the past year compared with the industry’s growth of 94.7%.
Image Source: Zacks Investment Research
From a valuation standpoint, Celestica trades at a forward price-to-earnings ratio of 27.47, up from the industry average.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Celestica’s earnings for 2025 has remain unchanged in the past 60 days.
Image: Bigstock
CLS Q1 Revenues Surge 20% Year Over Year: What's Driving the Growth?
Key Takeaways
Celestica, Inc. (CLS - Free Report) reported a substantial 20% top-line improvement year over year to $2.64 billion in the first quarter of 2025. The company witnessed solid growth in Connectivity & Cloud Solutions segment (“CCS”), driven by healthy demand in the Communications end market. Revenues from High Performance Solutions (“HPS”) product lines were up 99% year over year, backed by strong sales of 400G switches and growing traction for 800G switches from hyperscaler customers.
Growing investments in AI-native applications and generative-AI tools in various sectors are driving demand for Celestica’s data communications and information processing infrastructure products, such as routers, switches, data center interconnects and storage-related products. The company’s strength lies in its focus on innovation. It recently introduced ES1500, an advanced enterprise access switch designed to support modern IT infrastructure with complex and high-density IoT deployments. CLS’ DS4100, a 1U 800G per port top-of-rack, leaf/spine switch, is also gaining traction. The solution, powered by Broadcom’s TH4-12.8T switch chipset, effectively supports the high-bandwidth demands of data center networking.
Despite some macroeconomic uncertainties and growing geopolitical volatilities, Celestica expects strong revenue growth in 2025, driven by strength in AI-data center infrastructure market. Per the Zacks Consensus Estimate, the company expects to generate $10.91 billion in 2025, indicating 13.15% year-over-year growth.
How Are Competitors Faring?
Celestica faces stiff competition from Sanmina Corporation (SANM - Free Report) and Jabil, Inc. (JBL - Free Report) in the electronics contract manufacturing services industry.
In the second quarter of 2025, Sanmina’s Integrated Manufacturing Solutions generated $1.59 billion in revenues, registering 9.7% year-over-year growth. It has a strong presence across multiple end markets, including medical, defense, aerospace, communication, cloud infrastructure, automotive, industrial and energy. Such a diverse market presence strengthens its business resilience by mitigating risks associated with economic downturns in any single industry. Per the Zacks Consensus Estimate, Sanmina is expected to generate $8.1 billion in revenues in 2025, implying 7.02% year-over-year growth.
Jabil is also benefiting from solid growth in the Intelligent Infrastructure segment. The segment reported $3.4 billion in revenues in the May quarter, up 51% year over year. The uptrend is driven by healthy demand in the Capital Equipment, AI-related Cloud and Data Center Infrastructure verticals. Per the Zacks Consensus Estimate, Jabil expects to generate $29.05 billion in revenues in the current fiscal year, indicating 0.59% year-over-year growth.
Celestica's Price Performance, Valuation and Estimates
Celestica shares have gained 165.5% over the past year compared with the industry’s growth of 94.7%.
Image Source: Zacks Investment Research
From a valuation standpoint, Celestica trades at a forward price-to-earnings ratio of 27.47, up from the industry average.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Celestica’s earnings for 2025 has remain unchanged in the past 60 days.
Image Source: Zacks Investment Research
Celestica currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.