Unveil the reasons behind the compelling buy rationale for Celestica Inc. by delving beyond its staggering 77% surge over the past year. Basking in the rays of solid AI demand trends, Celestica has left competitors such as Flex Ltd. and Jabil Inc. in the dust. Based in Toronto, Canada, Celestica quietly emerges as a triumphant player in the AI revolution, offering a comprehensive suite of services in the electronics market. By seamlessly weaving together design, manufacturing, and supply chain management, the company plays a pivotal role as a silent partner to various electronics firms. Its extensive product range finds itself deeply entrenched in AI applications, which signals a promising growth trajectory in the foreseeable future.
The Momentum Behind the Generative AI Boom
Voyage on the wave of the generative AI boom alongside Celestica, which is witnessing soaring demand for AI/ML compute and networking products among hyperscale clients. Besides flaunting the high-performance 800G network switches crucial for AI-powered data centers, Celestica’s storage solutions like the SC6100 controller and SD6200 platform are paving the way for efficient and scalable data storage for AI applications. Introducing Photonic Fabric – a robust optical compute and memory fabric solution – Celestica fuels the AI infrastructure, creating a potent backbone for advancing AI applications with resilience, scalability, and profitability.
Portfolio Expansion for Customer-Centric Innovation
Underpinning its growth narrative, Celestica sharpens its focus on portfolio enrichment, as exemplified by the recent launch of SC6100 – a cutting-edge, all-flash storage controller. Equipped with two EPYC Embedded 9004 series processors from Advanced Micro Devices, Inc., the SC6100 boasts superior performance tailored for the most demanding enterprise application workloads. Powered by AMD’s “Zen 4” core architecture, this storage solution ushers in a new era of energy-efficient networking, security, and storage applications with enhanced flexibility and reliability, catering to enterprises grappling with escalating data volumes and real-time analytics demands.
Augmented Production Capabilities to Steer Growth
Fortifying its leading market stance in AI-enabled products, Celestica embarks on expanding its production foothold with over 100,000 square feet of additional capacity in Thailand. Concurrently, it is augmenting its production prowess by adding 80,000 square feet of incremental capacity in Malaysia. Fostering collaborations with industry stalwarts, Celestica drives the commercialization of cutting-edge technologies like On-Board Optics and Co-Packaged Optics to meet the escalating need for speed and cost-efficiency in the dynamic tech landscape.
Encouraging Estimate Revision Trend
Celestica’s robust growth narrative is further corroborated by a 47.2% surge in earnings estimates for 2024, settling at $3.65 over the past year. Notably, estimates for 2025 have also witnessed a remarkable 19.5% uptick year to date, standing at $3.99. Such positive estimate revisions underscore growing optimism around the stock’s upward potential.
Image Source: Zacks Investment Research
Final Thoughts
As Celestica ramps up its production volumes and operational costs dwindle, the prospects for silicon photonics are poised to scale new heights across diverse industry verticals such as automotive, data centers, telecommunications, and more. With a stalwart foundation of robust infrastructure investments, technological prowess, and an illustrious industry history spanning three decades, Celestica appears well-positioned for sustained growth in the long haul.
Boasting a trailing four-quarter average earnings surprise of 12.2%, a VGM Score of A, and currently donning a Zacks Rank #1 (Strong Buy), Celestica radiates with promise for further appreciation in its stock price. Positioned on a bedrock of a resilient earnings history and a favorable Zacks Rank, the stock emerges as a compelling bet for investors looking to capitalize on this soaring star.