Key Takeaways:
- AI Infrastructure Boom: Data center investments driving 44% Q4 revenue growth, with 800G networking switches ramping production.
- Price Projection: Based on current execution, CLS stock could reach $431 by December 2028.
- Potential Gains: This target implies a total return of 68% from the current price of $257.
- Annual Return: Investors could see roughly 20% growth over the next 2.8 years.
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Celestica (CLS) delivered exceptional Q4 2025 results, with revenue of $3.65 billion, marking 44% year-over-year growth and adjusted EPS of $1.89, exceeding guidance.
- The company’s adjusted operating margin reached a record 7.7%, driven by surging demand for AI data center infrastructure.
- For the full year 2025, Celestica achieved revenue of $12.4 billion and adjusted EPS of $6.05, representing growth of 28% and 56%, respectively.
- The company has now delivered consecutive years of 100-basis-point operating margin improvement.
- Management raised 2026 guidance to $17 billion in revenue and $8.75 adjusted EPS, representing 37% and 45% growth.
- More significantly, the company announced plans to invest $1 billion in capital expenditures in 2026 to build capacity to support customer demand through 2027 and beyond.
CEO Rob Mionis highlighted unprecedented visibility into demand extending into 2028.
The company has secured design and manufacturing awards for next-generation 1.6 terabyte networking switches with a third hyperscaler customer, adding to an already robust pipeline.
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What the Model Says for Celestica Stock
We analyzed Celestica through its position as a critical enabler of AI infrastructure buildout across hyperscale data centers.
The company benefits from multiple powerful tailwinds.
- Hyperscalers are deploying increasingly complex networking switches, transitioning from 400G to 800G platforms while ramping 1.6T products in late 2026.
- Celestica currently has 10 active 1.6T programs, with five beginning production ramps in the second half of this year.
- Beyond networking, Celestica serves as the preferred manufacturing partner for Google’s Tensor Processing Unit systems.
- The company is making substantial investments in both U.S. and international capacity to support current and future generations of custom AI accelerators.
- Management expects the Communications and Cloud Solutions segment to grow approximately 50% in 2026, building on $4.5 billion of growth versus 2025.
- Strong momentum should continue into 2027 with an additional $7 billion in segment growth as new programs ramp and capacity comes online.
Using a forecast of 36% annual revenue growth and 7.9% operating margins, our model projects the stock will rise to $431 within 2.8 years. This assumes a 19.3x price-to-earnings multiple.
That represents compression from Celestica’s recent P/E averages of 31.6x (one year) and 14.3x (five years). The moderate multiple accounts for eventual normalization as the AI infrastructure buildout matures and competition potentially intensifies.
The real value lies in capturing this extraordinary period of hyperscale infrastructure investment while maintaining strong execution on increasingly complex manufacturing programs.
Our Valuation Assumptions
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Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for CLS stock:
1. Revenue Growth: 36%
Celestica’s growth centers on structural demand for AI data center infrastructure.
The company delivered 44% revenue growth in Q4 2025, with the CCS segment growing 64%, driven by communications (up 79%) and enterprise markets (up 33%).
Management provided 2026 guidance of $17 billion, implying 37% growth.
Q1 2026 revenue guidance of $3.85-$4.15 billion represents 51% growth at midpoint.
The company has record bookings supporting this trajectory, with customer forecasts extending beyond typical visibility windows into 2028.
2. Operating margins: 7.9%
Celestica expanded adjusted operating margins to 7.7% in Q4 2025, marking the strongest quarterly performance in company history.
Full year 2025 margins reached 7.5%, representing the second consecutive year of 100 basis point improvement.
Management expects 2026 margins to expand by at least 30 basis points despite significant investments in growth.
The company benefits from strong operating leverage as revenue scales, with both ATS and CCS segments showing margin improvement.
3. Exit P/E Multiple: 19.3x
The market values Celestica at approximately 29x current earnings. We assume the P/E will compress to 19.3x over our forecast period as growth eventually moderates from current exceptional levels.
This multiple aligns with the company’s three-year historical average and reflects a premium valuation justified by market leadership in complex AI infrastructure manufacturing.
As capacity investments convert to revenue and the company demonstrates sustained execution, Celestica should maintain this valuation premium.
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What Happens If Things Go Better or Worse?
Technology manufacturing faces execution risks and demand cycle volatility. Here’s how Celestica stock might perform under different scenarios through December 2030:
- Low Case: If revenue growth moderates to 28.9% and net income margins compress to 5.9%, investors still see an 81.5% total return (13.1% annually).
- Mid Case: With 32.2% growth and 6.2% margins, we expect a total return of 151.5% (21.0% annually).
- High Case: If AI infrastructure acceleration drives 35.4% revenue growth while Celestica maintains 6.5% margins, returns could hit 238.4% total (28.7% annually).
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The range reflects execution on capacity expansion, continued hyperscaler infrastructure spending, and successful ramps of increasingly complex next-generation programs, including 1.6T networking and advanced AI compute platforms.
How Much Upside Does Celestica Stock Have From Here?
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All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
