When it comes to the future, many of us continue to focus our attention on artificial intelligence (AI). And now, even more of us are likely to focus our attention on Celestica (TSX:CLS), a TSX heavyweight that made the top of the TSX30 list this year. That comes after years of triple-digit growth! But can it last? Today, let’s look at what investors need to consider before diving into Celestica stock.
About CLS
First, despite seeing it in the headlines, many investors may not know what Celestica stock actually does. The AI stock is related through its global electronics manufacturing services (EMS) operations. The company offers many AI-related operations, including the design, manufacturing, assembly, logistics, and solutions for EMS hardware. It services hyperscalers, cloud providers, telecom, defence and more, now operating in over 50 sites in over 15 countries.
The key here is that the AI stock has tilted toward higher-margin, high-growth segments related to the cloud as well as hardware platform solutions geared towards AI and next-gen computing. In short, it’s moved from a contract manufacturing shop to an infrastructure and cloud hardware enabler — not just riding the tailwinds of AI and data centres, but supporting them.
Into earnings
The support for this growth is clear through earnings. During the second quarter of 2025, its connectivity and cloud solutions segment grew 28% year over year, with revenue up 21% to US$2.9 billion. Furthermore, adjusted earnings per share (EPS) rose to US$1.39, beating guidance. In fact, the AI stock did so well that it raised its guidance from US$10.85 billion to US$11.55 billion.
This also supported the fact that the AI stock continues to see opportunities for growth. That future growth has led to more share buybacks, with the company repurchasing about 600,000 shares for US$40 million during the second quarter alone. In short, investors, analysts, and insiders are all bullish on the stock.
What to watch
Yet it’s not perfect. If we look at valuations, a lot of the future growth might already be in the company’s share price. The AI stock trades at 53.2 times earnings, so while analysts are optimistic and continue to see the company growing, it’s definitely trading at a premium.
Furthermore, the growth may be strong, but any disappointments, even minor ones, could send shares downwards. If growth slows, margin expansion stalls, supply chain issues emerge, or anything else, the price could drop. Therefore, it’s certainly not a core holding, but perhaps investors can take a small stake.
Bottom line
Overall, Celestica stock is an AI stock that certainly has a lot of strengths behind it. It’s well positioned for near-term growth and to remain even one of the TSX’s big growth stories. Especially as AI continues to expand in multiple countries. That being said, sustaining the status quo into next year depends on the company avoiding pretty much any stumbles. Growth needs to stay strong, and capital discipline needs to hold. But if you’re an investor down for a bit of volatility, it could certainly belong on your 2026 watchlist.
