Celestica (TSX:CLS) has been on a tear. Over the past year, the tech stock surged more than 260%, turning heads across Bay Street and beyond. A tech stock once associated mostly with low-margin contract manufacturing is now being re-rated as a high-growth enabler of cloud infrastructure, artificial intelligence (AI), and advanced technology. With that kind of momentum, it’s no surprise investors are asking the question: Is Celestica still a buy?
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Into earnings
Looking at the most recent results, it’s hard not to be impressed. In the second quarter of 2025, Celestica reported revenue of $2.9 billion, up 21% year over year. Adjusted earnings per share (EPS) jumped 54% to $1.39, comfortably beating expectations. The tech stock also delivered its highest ever adjusted operating margin at 7.4%, driven by strong demand across both of its business segments.
The real driver here is Celestica’s transformation from a commodity assembler into a strategic partner for high-growth industries. In the Connectivity & Cloud Solutions segment, which includes enterprise servers and networking gear, revenue soared 28% year over year. A big part of that was thanks to Celestica’s expanding hardware platform business, which raked in over $1.2 billion in sales last quarter alone. That’s an 82% surge from last year. With AI data centre infrastructure in a secular uptrend, Celestica builds the hardware that keeps the whole system running.
Profitability has scaled alongside revenue. Net income in Q2 hit $211 million, more than double the same period last year. The tech stock’s return on equity sits above 30%, with a trailing 12-month net margin over 5%. Even more impressive is the free cash flow, expected to hit $400 million for the full year, giving Celestica ample flexibility for buybacks or reinvestment.
What to watch
At the same time, the Advanced Technology Solutions segment, which includes aerospace, health tech, and industrial clients, posted 7% revenue growth with expanding margins. It’s slower than the cloud side, but more stable. The company’s diversified model now gives it both growth and resilience.
The tech stock is also leaning into its strength with guidance. Management raised its full-year revenue outlook to $11.6 billion and boosted adjusted earnings per share (EPS) guidance to $5.50. That’s a clear signal it’s seeing strong visibility into customer demand. And it’s not just wishful thinking. Celestica repurchased over half a million shares last quarter, a tangible show of confidence in its future.
Valuation, however, is where things get complicated. With the tech stock trading near $260 per share and a forward price/earnings (P/E) above 35, Celestica is no longer a hidden gem. The market is now pricing in growth and flawless execution. Any misstep in the next few quarters, particularly around customer concentration or margin pressure, could trigger a sharp pullback. Add to that a beta over 1.6, and it’s clear this is a high-flyer with volatility to match.
Foolish takeaway
That said, Celestica has built a solid cushion. Debt remains modest, with a current ratio of 1.4 and over $300 million in cash on hand. Institutional ownership is high, suggesting that big money is buying the long-term story. And with the AI infrastructure cycle still early, the broader demand trend is likely to remain intact.
For investors looking to ride the next wave of tech buildouts, Celestica offers direct exposure without betting on unproven startups. But timing matters. After a massive rally, it’s fair to expect some cooling. A pullback could offer a better entry point, especially for those with a long horizon and appetite for growth.
So is Celestica a buy? For believers in the AI infrastructure story and those comfortable with momentum-driven names, the answer leans towards yes. Just be ready for some turbulence along the way. For more cautious investors, patience might pay off. Either way, this is no longer your average manufacturing stock. Celestica is playing in a new league, and it’s one worth watching.
