Will Growing AI Proliferation Drive Sustainable Growth for Celestica?

KennaSci/Tech2025-07-107790

Celestica, Inc. CLS, with its comprehensive portfolio offerings, is well-positioned to gain from growing AI proliferation in the data center and edge infrastructure market. Per precedence research AI hardware market is expected to grow at a 22.4% compound annual growth rate and reach $210.5 billion by 2034 from $34.05 billion in 2025. Several industries, such as healthcare, finance, retail, automotive and aerospace, are rapidly incorporating high data-intensive AI applications. Growing complexity in AI workloads is driving demand for power-efficient and highly scalable hardware solutions that can seamlessly support AI innovation and deployment.

Celestica is steadily expanding its offering through innovation and strategic collaboration to gain from this emerging market trend. The company’s DS4100 is a 1U 800G per port top-of-rack, leaf/spine switch, designed with Broadcom’s TH4-12.8T switch chipset, witnessing healthy traction in the data-center networking market. Its next-generation, 2U rackmount all-flash storage controller, powered by PYC Embedded 9004 series processors from Advanced Micro Devices, delivers superior performance for the most demanding enterprise application workloads.

The company expects that its extensive 800G Family of Networking Switches will be major growth driver in the long run. It includes Celestica’s state-of-the-art DS5000 and D4100 switches that are optimized for AI/ML, Big Data Analytics and effectively support hyperscale data center and cloud computing applications. The company also recently introduced the ES1500 switch tailored for edge AI deployments and IoT expansion in smart campuses, healthcare and industrial sites. A broad portfolio of data communications and information processing infrastructure products allows the company to effectively match a wide range of use cases.

How Are Competitors Faring?

Celestica faces competition from Jabil, Inc. JBL and Flex Ltd. FLEX.

Jabil is benefiting from healthy demand in the Capital Equipment, AI-related Cloud and Data Center Infrastructure verticals. The company recently announced a $500 million multi-year investment initiative in the Southeast U.S. region. The investment is focused on expanding manufacturing capabilities and workforce development for the cloud and AI data center infrastructure market. The strategic investment will strengthen Jabil’s position in the AI hardware supply chain.

Flex is witnessing solid demand across its data center, networking and automotive power electronics verticals. Its portfolio has less exposure to the hyperscaler infrastructure market. Flex’s core focus is on industrial AI, robotics and automation. However, the acquisition of JetCool Technologies has improved its data center and power solutions to help hyperscale and enterprise customers address growing challenges related to power, heat and scalability in the AI era.

Story continues

Celestica's Price Performance, Valuation and Estimates

Celestica’s shares have gained 167.5% over the past year compared with the industry’s growth of 96.4%.

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From a valuation standpoint, Celestica trades at a forward price-to-earnings ratio of 27.89, up from the industry average.

 

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The Zacks Consensus Estimate for Celestica’s earnings for 2025 and 2026 has remained unchanged in the past 60 days.

 

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Celestica currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Jabil, Inc. (JBL) : Free Stock Analysis Report

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

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