If you invested $10,000 in Celestica (TSX: CLS) stock at the start of 2025, your money has more than doubled to $21,154. The stock has surged 113% in the last seven months, and this is not even its best performance. Those who invested in the stock in April, at a dip of $94.08, saw their money triple to $30,302. Behind this sharp rally is the growing investment in artificial intelligence (AI) infrastructure.
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Why did Celestica stock soar in 2025?
This North American electronics manufacturing service (EMS) company enjoyed a growth spurt of this magnitude for the first time since 2000. The last two decades saw a shift in manufacturing from North America to China, which led to a slowdown in North American EMS companies. However, Trump tariffs and a growing investment in AI infrastructure have created a conducive environment for Celestica to grow by leaps and bounds.
| Celestica’s Earnings Highlights | 2022 | 2023 | 2024 | 2025* |
| Revenue ($ billion) | $7.3 | $8 | $9.6 | $11.6 |
| YoY growth | 9.6% | 20% | 20.3% | |
| Adjusted EPS ($) | 1.94 | 2.5 | 3.9 | 5.5 |
| YoY growth | 26.8% | 57.7% | 41.8% |
The manufacturer saw a 20% jump in revenue in 2024, driven by demand for servers and storage by enterprises and hyperscalers. Its adjusted earnings per share (EPS) grew faster than revenue, at 27% in 2023 and 58% in 2024, as it benefited from economies of scale and a larger share of high-margin products.
However, this growth slowed in the first quarter of 2025 amid uncertainty around Trump tariffs.
Behind the 197% rally from April to August
The tariff uncertainty pulled down Celestica’s share price by 54% between February 5 and April 4. As April brought clarity around tariffs, demand for networking switches that connect servers picked up. This saw a V-shaped recovery for Celestica, and the stock resumed its February high of $205 by June end.
The next growth spurt of 17% came on July 28 when the company released second-quarter earnings. This time, the growth came from the Communications vertical, which drove Celestica’s second-quarter revenue up 21% year-over-year to $2.89 billion, exceeding its guidance of $2.72 billion. Its adjusted EPS surged 54% to $1.39, exceeding its guidance of $1.27. Moreover, the company reported its highest quarterly free cash flow (FCF) of $120 million in eight quarters.
These better-than-expected earnings were accompanied by revised 2025 guidance. Celestica increased its 2025 revenue guidance from $10.85 billion to $11.55 billion, representing a 20% upside from 2024. The company expects the tariff situation to remain unchanged and strong demand from enterprises and hyperscalers in the second half to drive its revenue.
Is there more upside for Celestica stock?
Celestica is trading at its all-time high and at inflated valuations of a 2.3 times price-to-sales ratio, way more than the 0.8 times in the second quarter last year. Its forward price-to-earnings ratio has also grown to 37.3 times, from 17.3 times in the second quarter last year.
Even the technical indicators hint that the stock is overbought with a Relative Strength Index (RSI) of 74. The RSI measures the price momentum to determine if the stock is oversold or overbought.
There is more upside for Celestica, but it will probably see a mild correction before the rally. What makes me bullish is the orders flowing in from hyperscalers like Hive Digital Services, Amazon, and Meta that are investing billions in AI.
Should you consider buying this tech stock?
However, if you are considering buying Celestica at the current price point of $285, it would be risky as the upside is limited. While we can say that Celestica is riding the AI wave, let us not forget that it does not have a technological advantage like Broadcom or TSMC.
If you already own Celestica stock, it is worth holding on to as the growth cycle is still in motion. Those looking to take a position in Celestica could wait for a correction to buy the dip.
Or, you could consider investing in Hive Digital Technologies, which is building its bitcoin mining capacity and is next in the supply chain to benefit from AI adoption. The company is leasing AI cloud capacity to companies and seeing robust demand in this space. The market has not yet priced in the growth potential of its AI cloud services.
