1 Super Tech Stock (Besides NVIDIA) to Buy Hand Over Fist in 2024

A TSX super tech stock could deliver comparable or far better returns than the AI king across the border.

| More on:
Person uses a tablet in a blurred warehouse as background

Source: Getty Images

Today’s tech superstar on the Nasdaq Composite is NVIDIA (NASDAQ:NVDA). This year is memorable for the graphics processing unit (GPU) because it became the king of artificial intelligence (AI). As of this writing, the market cap stands at US$3.1 trillion. Many investors regret missing out on the AI stock’s meteoric rise.

NVIDIA has a long growth runway ahead, although if you’re a Canadian investing in foreign stocks, you must hold it in your Registered Retirement Savings Plan (RRSP) to avoid paying a 15% foreign tax. However, Celestica (TSX:CLS) is also a super tech stock.

You won’t worry about the foreign tax because Celestica is a domestic stock. Hold it in a Tax-Free Savings Account (TFSA) for tax-free capital gains. Performance-wise, current investors are up 108.01% year to date. The overall return in 3.01 years is 748% compared to NVIDIA’s +530.44% in the same period. Also, Celestica trades at C$80.73 per share versus the US$128.20 for the American counterpart.

AI player

Celestica provides complete lifecycle solutions to help clients optimize their supply chains, overcome market challenges, and minimize costs.

The $9.59 billion company is three decades old. Today, it offers products and services to original equipment manufacturers (OEMs), cloud-based, and other service providers. Customers come from various industries, such as aerospace, defence, industrial, health, communications, and enterprise markets.

Revolutionizing AI is not exclusive to NVIDIA. Celestica’s DS400, IU 32-port 400GbE data center switch is a powerful, high-capacity switch that’s ideal for modern AI workload demands. DS4000 is just one of a line of switches offering an open management approach and enabling cost efficiency at scale.

Financial performance

Advanced Technology Solutions (ATS) and Connectivity & Cloud Solutions (CCS) are the core business segments that contribute to revenues. The former has a higher margin profile and margin volatility and requires higher working capital. CCS is in a more competitive environment, subject to negative pricing pressures and experiences technology-driven demand shifts.  

Celestica is a dwarf alongside NVIDIA in terms of market capitalization. Nevertheless, its financial performance is mighty impressive. In the first quarter (Q1) of 2024, revenue and net earnings climbed 20.2% and 311.7% to US$2.2 billion and US$101.7 million versus Q1 2023. For 2024, the revenue outlook is US$9.1 billion compared to the original forecast of US$8.5 billion.

Management considers global supply chain constraints as a business risk in the mid-term. Celestica can’t predict future developments, including when ultimate suppliers return to full production and logistics providers’ operations return to normal. Fortunately, growth is on the horizon for the CCS segment following the definitive agreement to acquire NCD Global Services for US$36 million.

NCS, a U.S.-based company that offers IT infrastructure and asset management business, is expected to accelerate the IT Services roadmap within the CCS segment.

Thriving in a competitive sector

NVIDIA is the dominant force in the AI space, but other tech giants are potential threats to its business. They are developing custom chips to handle AI workloads. Meanwhile, Celestica commits to making necessary investments to support long-term objectives and create shareholder value. Thus far, the stock performance reflects a thriving business in a highly competitive technology sector.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends Nvidia. The Motley Fool has a disclosure policy.

More on Tech Stocks

Person uses a tablet in a blurred warehouse as background
Tech Stocks

Check Out This Soaring Stock, Up 29% From 52-Week Lows, With More Gains Likely to Come

This top tech stock is now up 29% from lows, but still down 12% in the last year. And it…

Read more »

A shopper makes purchases from an online store.
Tech Stocks

Up 50% From its 52-Week Low, Is Shopify Stock Still a Buy?

Shopify (TSX:SHOP) stock has been both a winner and loser on the TSX, but after a recent upgrade, could it…

Read more »

Dollar symbol and Canadian flag on keyboard
Tech Stocks

2 Canadian Stocks to Watch While They’re Still Dirt Cheap

These two Canadian stocks offer ample opportunities as the world shifts into not just AI but cybersecurity needs.

Read more »

A stock price graph showing growth over time
Tech Stocks

1 Hidden Catalyst That Could Ignite Dye & Durham Stock 

Dye & Durham stock surged more than 15% in the last two weeks. What is igniting the growth after a…

Read more »

a person searches for information on the internet
Tech Stocks

Before You Buy Nvidia: Here’s An AI Stock I’d Buy First 

Nvidia is the first stock that comes to your mind for AI. However, consider diversifying your AI stocks across the…

Read more »

edit Woman calculating figures next to a laptop
Tech Stocks

How to Buy UiPath Stock in Canada

UiPath is a beaten-down AI stock that trades at a massive discount to its earnings growth. Is the tech stock…

Read more »

A shopper makes purchases from an online store.
Tech Stocks

Is It Still Prudent to Invest in Shopify Stock?

Let's dive into whether Shopify (TSX:SHOP) remains a top TSX stock investors should consider, or if this company may be…

Read more »

edit Businessman using calculator next to laptop
Tech Stocks

Which TSX Stock Is Best to Buy Today? 

The stock market is going green with optimism over hopes of economic recovery. You can benefit from this rally with…

Read more »