Shares of the companies related to the artificial intelligence (AI) ecosystem have gained significantly in value. Moreover, the steady stream of investment pouring into AI suggests these gains are far from over.
If you’re looking to put $1,000 to work and tap into this megatrend, here is a top TSX stock likely to benefit from AI-driven demand.
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The ultimate AI stock
While several TSX stocks benefitted from AI-driven demand, Celestica’s (TSX:CLS) growth has been explosive. Over the past year, its shares have surged more than 131%. Stretch that out over three years, and the gains exceed a staggering 1,090%. This shows the solid momentum in its business.
Celestica plays a key role in supporting the infrastructure behind AI. Its growth has been driven by strong demand from hyperscalers building out data centers to meet the increasing needs of AI, machine learning, and cloud computing.
Looking ahead, Celestica’s fundamentals still look very promising. As AI applications become more widespread and require ever more computing power, Celestica is well-positioned to benefit from the higher spending on AI infrastructure. This gives it a promising runway for continued growth.
AI demand to drive Celestica stock
Celestica could continue to benefit from strong AI-driven demand. The company has been shifting its focus toward higher-value areas, with emphasis on its Hardware Platform Solutions (HPS) portfolio. This growing segment falls under its Connectivity and Cloud Solutions (CCS) division, which serves the networking and enterprise markets.
In the first quarter of 2025, Celestica’s HPS business delivered impressive results, with revenue surging 99% year over year to hit the $1 billion mark. The HPS business represents about 39% of Celestica’s total quarterly revenue. The HPS segment’s solid growth reflects increased demand from hyperscaler customers who are scaling up their data center infrastructure due to the rising need for AI, machine learning, and cloud services.
Celestica is benefitting from its ability to deliver custom, high-performance platform solutions through its design and engineering expertise. This has made the company a go-to partner for hyperscalers seeking to build next-generation data center capabilities. Moreover, its recent contract wins suggest that this momentum will drive higher volume in the coming years.
Celestica has secured several key program wins that are set to ramp up over the coming years. These wins, backed by strategic capital investments and an expanding manufacturing footprint, signal that the company will deliver strong growth.
Overall, Celestica’s focus on innovation and solid AI data center platforms positions it well to capitalize on AI demand and deliver solid growth.
Celestica’s ATS segment to support growth
Celestica’s growth will be further supported by its Advanced Technology Solutions (ATS) segment, which encompasses key end markets such as Aerospace and Defense, Capital Equipment, HealthTech, and Industrial sectors. Each of these end markets adds resilience through diversification and connects the company to industries with long-term growth trajectories and protected by significant barriers to entry.
Celestica is investing in advanced capabilities and is offering custom solutions to meet demand. With a strong focus on high-value manufacturing, Celestica is navigating the current macroeconomic challenges while building resilience for the future. This will enable Celestica to maintain its upward trajectory.
The bottom line
Celestica will benefit from the growing investments in AI infrastructure. Further, Celestica is expanding its footprint in high-growth markets and deepening relationships with strategic customers, all while im[proving its engineering and operational strengths. This combination bodes well for its long-term growth potential.
Moreover, Celestica’s strong balance sheet, ability to effectively manage cash flow, and disciplined capital allocation position it well to capitalize on growth opportunities.
