Valued at a market cap of $33 billion, Celestica (TSX: CLS) is a TSX stock that has been on an absolute tear in the last 12 months, rising close to 300%. Moreover, in the past decade, Celestica stock has returned an emphatic 1,560%, crushing broader market returns by a wide margin.
As past returns are not reflective of future gains, let’s see if you should own this TSX tech stock at the current valuation.
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How did Celestica stock perform in Q2 2025?
Celestica is a global electronics manufacturing services provider offering comprehensive supply chain solutions through two segments: Advanced Technology Solutions and Connectivity and Cloud Solutions.
It provides design, development, manufacturing, assembly, testing, systems integration, and after-market services to original equipment manufacturers and cloud service providers.
Celestica serves diverse markets, including the aerospace and defence, industrial, HealthTech, capital equipment, communications, and enterprise sectors, with particular strength in hyperscale data centre infrastructure manufacturing.
Celestica stock represents a compelling investment opportunity as the company rides the unprecedented wave of AI-driven data centre expansion. The electronics manufacturing services provider delivered exceptional Q2 results, with revenue of $2.9 billion and adjusted earnings per share of $1.39, both exceeding guidance ranges.
The investment thesis centers on Celestica’s dominant position in networking infrastructure for hyperscale customers. Its Communications and Cloud Solutions (CCS) segment grew by 28% year-over-year, driven by explosive demand for 800G networking switches alongside continued strength in 400G products.
Notably, 800G volumes reached parity with 400G in Q2, with every major 400G customer transitioning to 800G platforms. This positions Celestica to capture market share gains as hyperscalers like Google, Amazon, and Microsoft rapidly expand their AI infrastructure.
Management remains optimistic about near-term growth as it forecasts revenue of $11.6 billion in 2025, an increase of 20% year over year. Comparatively, adjusted earnings are forecast to increase by 20% to $5.50 per share. Celestica reported an operating margin of 7.4% in Q2, a quarterly record and expects free cash flow to total $400 million this year.
Celestica’s competitive moat stems from its globally diversified manufacturing footprint across 16 countries, providing customers with supply chain resilience and geographic flexibility. The company has proven manufacturing readiness with capacity to support $3–4 billion in additional revenue across key locations, including Thailand, Mexico, and Texas. This scalability advantage is crucial as hyperscalers continue aggressive capital expenditure spending on AI infrastructure.
Is the TSX stock still undervalued?
Analysts tracking Celestica stock forecast revenue to rise from $9.6 billion in 2024 to $19.2 billion in 2028. Its adjusted earnings are forecast to expand from $3.88 per share to $11.2 per share in this period.
Today, the TSX tech stock trades at 34 times forward earnings, which is much higher compared to its historical multiple of 10.4 times. If CLS stock is priced at 30 times forward earnings, it should trade around $336 in early 2028, indicating upside potential of 18% from current levels.
The secular tailwinds supporting Celestica’s growth remain robust. Hyperscaler customers are in early innings of multi-year AI infrastructure buildouts, with recent capital expenditure increases from major cloud providers validating the sustained demand environment.
The upcoming transition to 1.6T networking and next-generation AI/ML compute platforms provides additional growth catalysts extending through 2026–2027.
Trading at reasonable valuations despite exceptional fundamentals, Celestica stock offers investors direct exposure to the AI infrastructure boom through a proven execution partner with market-leading capabilities, strong customer relationships, and operating leverage at volume scale.
