Key Takeaways:
- Revenue Growth: 34.6% annually through 2028, driven by AI infrastructure and data center expansion.
- Price Projection: Based on current execution, CLS stock could reach $538 by December 2028.
- Potential Gains: This target implies a total return of 91% from the current price of $281.
- Annual Return: Investors could see roughly 25% growth over the next 2.9 years.
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Celestica Inc. (CLS) just raised its 2026 revenue outlook to $17 billion after delivering exceptional Q4 results. The company achieved revenue of $3.65 billion in the quarter, up 44% year-over-year, while adjusted earnings per share jumped 70% to $1.89.
CEO Rob Mionis is executing an aggressive expansion strategy that capitalizes on surging demand. With $1 billion in planned capital expenditures for 2026 and record bookings across networking and compute programs, Celestica is positioning itself as a critical enabler of the AI revolution.
The company expects to generate $500 million in free cash flow in 2026 despite the massive capacity buildout.
Celestica stock trades at $281, offering significant upside for investors who recognize the company’s strategic positioning in AI infrastructure.
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What the Model Says for Celestica Stock
We analyzed Celestica’s transformation into a leading provider of advanced data center solutions and networking equipment for hyperscale customers.
- The company is ramping production of 800G networking switches while simultaneously preparing for the launch of 1.6T programs later this year.
- Management just announced a third hyperscaler win for 1.6T switches, building on momentum from Google’s TPU systems and other AI/ML compute programs.
- Celestica is investing over 700,000 square feet in Texas facilities and more than 1 million square feet in Thailand to support multi-year customer roadmaps.
- The company operates as a preferred manufacturing partner for Google’s Tensor Processing Units and is expanding capacity across its global network.
Using a forecast of 34.6% annual revenue growth and an 8.0% operating margin, our model projects the stock price will rise to $538 in 2.9 years. This assumes a 25.0x price-to-earnings multiple.
That represents compression from Celestica’s current NTM P/E of 31.3x and its historical averages of 31.1x (one year) and 13.9x (five years).
The lower multiple acknowledges potential execution risks as the company scales production and navigates supply chain dynamics.
The real value lies in capturing the massive wave of AI infrastructure spending and maintaining strong relationships with hyperscalers investing billions in data center buildouts.
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: 34.6%
Celestica’s growth centers on two powerful trends: networking switch upgrades and AI/ML compute expansion.
The company’s CCS segment is expected to grow to approximately $4.5 billion in 2026, with management indicating similar momentum extending into 2027.
Communications revenue is projected to grow in the low 60s, driven by 800G switch ramps across multiple hyperscalers. Enterprise end market revenue should surge, supported by next-generation AI/ML compute programs.
Management has unprecedented visibility extending into 2028, with customers providing multi-year capacity roadmaps. The $1 billion CapEx investment is tied to specific program wins already booked, not speculative demand.
Nearly 40% of the company’s Q4 revenue came from its HPS business, which generates higher margins through design-led engagements. As 1.6T and eventually 3.2T programs ramp up, Celestica’s engineering-intensive approach becomes increasingly valuable.
2. Operating margins: 8.0%
Celestica is expanding margins while investing heavily in growth.
Adjusted operating margin reached 7.7% in Q4, marking the strongest quarterly performance in company history. For 2025, the full-year operating margin of 7.5% represented the second consecutive year of 100 basis point improvement.
The company expects margins to expand by at least 30 basis points in 2026 despite ramping new programs. Strong operating leverage from volume growth is offsetting the typical margin pressure from new product introductions.
Management maintains rigorous ROIC discipline, with adjusted ROIC reaching 43% in Q4, up 14 percentage points year over year. Every capital investment undergoes strict return analysis at both the customer and program level.
3. Exit P/E Multiple: 25.0x
The market values Celestica at 31.3x forward earnings. We assume the P/E will compress to 25.0x over our forecast period.
Near-term execution risk, as the company scales production capacity, weighs on the multiple. The aggressive CapEx program requires flawless coordination with suppliers and customers.
However, Celestica’s deepening relationships with hyperscalers and expanding design capabilities support a premium valuation.
The company generates over $458 Million free cash flow conversion in 2025, even while funding billion-dollar capacity expansions, demonstrating exceptional capital efficiency.
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What Happens If Things Go Better or Worse?
Technology companies face execution challenges and demand volatility. Here’s how Celestica stock might perform under different scenarios through December 2030:
- Low Case: If revenue growth slows to 27.3% and margins compress to 5.8%, investors still see a 114% total return (16.7% annually).
- Mid Case: With 30.3% growth and 6.2% margins, we expect a total return of 195% (24.6% annually).
- High Case: If capacity ramps accelerate and Celestica maintains 6.5% margins while growing at 33.3%, total returns could reach 294% (32.2% annually).
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The range reflects execution on capacity expansion, success ramping 1.6T programs, and sustained hyperscaler spending on AI infrastructure.
In the low case, supply chain constraints slow production ramps or customer demand moderates as AI spending cycles normalize.
In the high case, hyperscalers accelerate infrastructure buildouts, 1.6T adoption exceeds expectations, and Celestica wins additional design mandates for next-generation products like 3.2T switches and advanced AI compute systems.
How Much Upside Does Celestica Stock Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
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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!
