Celestica (TSX:CLS) is one of the top-performing stocks on the S&P TSX Composite Index. The stock is up about 242% year to date and has gained over 3,000% in three years, growing at a compound annual growth rate (CAGR) of 214.3%.
This solid momentum in Celestica stock stems from the global boom in artificial intelligence (AI) infrastructure spending. Celestica’s ability to design and deliver customized, high-performance hardware platform solutions (HPS) that meet the rigorous demands of modern AI-driven environments positions it well to capitalize on demand.
From engineering and manufacturing to advanced supply chain and software services, Celestica offers end-to-end solutions that position it as a trusted partner for hyperscale cloud providers racing to build next-generation data centres.
This positioning is clearly reflected in the company’s financial results. In the third quarter, revenue from Celestica’s Connectivity and Cloud Solutions (CCS) segment jumped to US$2.41 billion, a 43% increase year over year. The CCS business now accounts for roughly three-quarters of Celestica’s total revenue, reflecting its key role in the company’s growth story.
Within the CCS segment, communications end market revenues soared by 82%, far exceeding the company’s own guidance of low-60% growth. This impressive expansion was largely driven by surging demand in data centre networking, particularly for 800G switch programs among its largest hyperscaler clients, complemented by continued strength in its optical product lines.
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AI-supported demand to push Celestica stock higher
Celestica’s growth trajectory remains solid, with the ongoing momentum across its communications end market. Demand for its high-performance data centre networking switches, especially those tied to multiple 800G programs, continues to surge, supporting optimism for the quarters ahead.
The enterprise segment is expected to return to growth in the fourth quarter of 2025, with revenue likely to climb by about 20% as Celestica ramps up production for a next-generation AI and machine learning compute program serving hyperscale customers.
The company’s strategic pivot toward higher-value offerings through its Hardware Platform Solutions (HPS) portfolio, part of its CCS division, provides a solid base for future growth. In the third quarter, its HPS business generated US$1.4 billion in revenue, accounting for 44% of total revenue.
In addition, Celestica has aggressively ramped up its investment in design engineering and technology for data centres. The company has deliberately exited lower-margin projects to focus on complex, high-return opportunities that strengthen customer partnerships and improve profitability. Further, growing volumes are enhancing operating leverage, while ongoing efficiency efforts across Celestica’s global network are driving productivity gains.
Celestica’s customer-centric supply chain strategy also stands out, offering partners resilient, geographically diversified solutions amid global trade uncertainty. Supported by robust operational cash flow, Celestica continues to expand and upgrade its network capacity, particularly in North America, to meet rising AI data centre demand.
With hyperscaler and digital-native customers planning substantial production ramps through 2028, Celestica appears well-positioned to sustain growth and capitalize on AI-driven demand.
Celestica stock to more than double in three years
The AI-led tailwinds will likely drive Celestica’s financials and share price higher in the coming years. Over the past three years, the stock has grown at a CAGR of more than 214%. Even if that growth pace slows to a more modest 30% CAGR, the stock could still reach $997.68 in three years, more than double its closing price of $454.11 on October 28.
