Every once in a while, there comes a stock that rallies exponentially, making its investors wealthy. Even a $1,000 investment in such stocks can bring significant returns. One such stock is electronics manufacturing services company Celestica (TSX:CLS), which got its big break from the artificial intelligence (AI) boom. The AI infrastructure increased the demand for data centre servers and networking switches exponentially.
Celestica’s earnings exceed expectations
Celestica makes Ethernet switches, custom application-specific integrated circuits (ASICs), and scale-up fabric for networking infrastructure under its CCS (Communications and Components Services) segment. It provides design, engineering, and manufacturing services and has been beating its own guidance since 2022. Even in the third quarter of 2025, its revenue and adjusted earnings per share (EPS) rose 28% and 52% year-over-year, respectively.
In light of strong earnings, the company revised its 2025 guidance upwards. It increased adjusted EPS guidance from US$5.50 to US$5.90 and revenue guidance from US$11.5 billion to US$12.2 billion. From the $12.2 billion revenue, around US$7 billion is expected to come from Communications, primarily custom Ethernet Switches. Around US$2 billion is expected to come from custom ASIC and storage.
Celestica is building a new production line in Mexico and adding capacity in Malaysia to meet increasing CCS demand from hyperscalers.
Ethernet switches opportunity
Within the Ethernet switches space, Celestica is making switches for market leader Broadcom. It built a 400-gigabit-per-second (Gbps) data centre switch in 2020 and achieved a leading market share in 2022. It then introduced and gained market share in the 800Gbps switch in 2024.
This scaling up has increased the revenue contribution of Ethernet switches from 33% in 2022 to 55% in 2025. Now, it has introduced a 1.6Tbps switch and will keep scaling to 3.2Tbps and above to tap the US$50 billion addressable market of high-bandwidth Ethernet switches.
The Ethernet switch market is expected to grow at a compounded annual growth rate (CAGR) of 30% by 2029 as bigger clusters need more interconnects. This could help Celestica maintain a strong double-digit revenue growth rate.
ASIC opportunity
Another opportunity Celestica is tapping is custom ASIC. Custom ASICs are gaining popularity as they deliver superior price-to-performance for specialized workloads. This market is expected to grow at a CAGR of 54%. Celestica has not yet secured a significant market share in this area, but it presents a strong growth opportunity.
If you’d invested $1,000 in Celestica stock five years ago, you would now have…
In the last four years, from 2022 to 2025, Celestica has grown its revenue at a 19% CAGR by gaining market share in a growing market.
A $1,000 investment in Celestica on 2020 Thanksgiving could have bought you 98 shares at $10.22 per share. Those who bought these shares then are thankful to the AI boom, as their $1,000 investment is now worth around $45,800.
The next five years could see this growth continue. Every AI infrastructure refresh cycle creates an opportunity to double your investment.
