Celestica (TSX:CLS), a fast-growing Canadian technology hardware manufacturing and supply chain services partner to a budding artificial intelligence (AI) ecosystem, has ballooned from a modest $1.6 billion market cap in late 2022 into a $40 billion behemoth as of September 2025. But after a monumental 2,660% run in three short years, could there be more to Celestica’s growth story?
Let’s dive into the numbers, the markets, and the strategy to see just how much growth potential Celestica stock truly has over the next three years.
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Celestica’s financial firepower and stellar execution
Celestica’s recent financial performance is nothing short of impressive. During the second quarter of 2025, revenue hit a record $2.9 billion, soaring 21% year-over-year and soundly beating guidance. More importantly, profitability is exploding with adjusted earnings per share (EPS) surging 54% to $1.39. Growth has come from high-margin data-center-related business lines. The company’s adjusted operating margin expanded by 110 basis points to 7.4%. Celestica’s impressive revenue growth is accompanied by stronger profit margins, a beautiful combination investors love to see.
Management raised its full-year 2025 revenue guidance from $10.9 billion to $11.6 billion, implying 20% sequential growth from 2024.
Riding an unstoppable AI wave
Celestica’s growth story is premised on its pivotal role as a hardware enabler for the artificial intelligence revolution. The company operates through two segments: Advanced Technology Solutions (ATS) and Connectivity & Cloud Solutions (CCS). Its CCS segment, which made up 72% of second-quarter revenue, is the clear growth star. Within CCS, the communications business (networking switches and data centre interconnects) exploded by 75% year-over-year.
Why is this happening? The world’s tech giants are in an arms race to build AI infrastructure, and Celestica is among the key arms dealers, alongside Nvidia. The company has recently scored high-profile program wins with AI leaders like OpenAI and Meta Platforms. It’s involved in cutting-edge projects like Meta’s 1.6T switching technology and building full AI rack systems for OpenAI. Meta could invest US$600 billion in U.S. data centres through 2028.
Celestica could enjoy more business still. The “Big Four” AI market players (Amazon.com, Alphabet, Microsoft, and Meta) continue to spend hundreds of billions on capital expenditures in 2025 alone, with the vast majority directed at AI infrastructure. Investment bank UBS forecasts global AI spending will hit US$480 billion in 2026. Celestica, with its deep partnerships and expertise in high-performance switching and server platforms, is perfectly positioned to capture a significant slice of this monumental spend.
Bay Street analysts forecast an 18.8% compound annual growth rate (CAGR) for Celestica’s revenue over the next two years, with earnings per share growth rates exceeding 30% annually.
Beyond AI: Celestica’s diversification and strategic shrewdness
While AI gets most headlines, Celestica’s business lines are diversified. Its ATS segment (28% of revenue) – which serves aerospace and defence, healthtech, and industrial markets – also saw a healthy 7% revenue increase and stronger margins. Recent geopolitical tensions are triggering increased defence spending globally, providing another potential growth vector.
Management is also shrewdly navigating risks. It acknowledges a key vulnerability: customer concentration. Celestica’s top 10 customers represented 73% of 2024 revenue. However, the company is actively working to diversify its customer mix and product portfolio, focusing on higher-margin, value-added services like design, development, and after-market support within its Hardware Platform Solutions (HPS) business.
Risks and the valuation question
Celestica’s high customer concentration is a real issue, especially in the highly competitive electronics manufacturing services (EMS) industry. A slowdown in AI infrastructure spending by hyperscalers, though not anticipated soon, would hurt.
Then there’s the valuation angle. With a forward price-to-earnings (P/E) multiple of 40, Celestica stock is far from cheap. The market is pricing in a lot of future growth. This makes it sensitive to any earnings missteps or shifts in market sentiment.
The Foolish bottom line
So, just how much growth potential does Celestica stock still have? Significant. The company has transformed itself from a low-margin contract manufacturer into a critical, high-value partner in the most transformative technology trend of our generation. Its financial future looks robust. Growth is accelerating, margins have expanded, and it is riding a long-term, multi-billion-dollar wave of AI infrastructure spending.
While its valuation demands respect and the risks of customer concentration are real, Celestica’s strategic positioning, execution excellence, and exposure to secular growth trends suggest double-digit growth rates may be sustained through 2028.
Investors with a higher risk tolerance and a long-term horizon may build positions in Celestica stock while watching execution quarter-to-quarter to ensure it continues to meet the lofty expectations its current price commands.
