Celestica (TSX:CLS) stock has skyrocketed by more than 3,600% during the past five years, but it faced significant volatility and wild swings in 2025, a fair consolidation period after an explosive run. In the cyclical technology sector, this supply chain solutions giant could still enjoy strong customer orders for its artificial-intelligence (AI) data centre components as world economies continue to relentlessly build AI competitiveness. Many expectations remained embedded in the CLS stock price going into 2026.
The company should continue to ride the hyperscaler spending tailwind in 2026. But its valuation multiples have grown worryingly higher for value-conscious investors, potentially limiting the stock’s upside as global geopolitical tensions escalate, increase project risks, and potentially tame capital spending plans. Here’s my outlook for Celestica stock for this year.
2026’s promise to Celestica stock investors
Celestica’s rapid revenue and earnings growth phase continues into 2026. Investors will get a better feel for the year as the company reports fourth quarter (Q4 2025) results on January 28. The company’s connectivity and cloud solutions (CCS) segment remains fired up as clients order AI equipment, while a smaller ATS segment, which serves industrial, aerospace and healthcare markets faces inventory corrections and weak demand.
Management projected a strong (high 60s) percentage growth in communications segment revenue for the final quarter of 2025. Combined with a low-20s increase in enterprise end market sales, Celestica is expected to grow quarterly revenue by at least 30% and boost earnings higher in the upcoming earnings report.
High revenue growth rates should sustain throughout the year, and Bay Street projects strong 33.5% sequential growth in Celestica’s revenue to US$16.3 billion this year, with earnings surging even faster at 42% year-over-year to US$8.42 per share for 2026.
Celestica has won significant market share in the data centre switches market as hyperscalers build new AI-capable data centres. As long as they continue on this capital expenditure arms race in 2026, the manufacturer should continue to win lucrative deals this year.
Big tech and sovereign AI spending overdrive should continue in 2026, or else CLS stock may suffer.
Watch out for a valuation reset
The biggest risk to new Celestica investors in 2026 could be the Canadian tech stock’s high valuation.
Celestica stock has substantially repriced during the past three years. The stock used to trade like a boring electronics contract manufacturer with a low price-earnings ratio. This has changed. Celestica stock is now a high-value AI play, and deservedly so.
At writing, Celestica stock traded at a forward P/E of 35. This is significantly higher than its historical averages and well above industry peers like Jabil Circuit (JBL) or Flex, both trading at 18.4 times forward earnings.
However, a forward PEG of 1 implies CLS stock could be fairly valued given its strong earnings growth potential.
CLS stock looks priced to perfection. Any miss on its revenue or earnings growth targets or a significant downward revision to the same may trigger a sell-off and result in significant volatility in its share price. The downside risk could be significant, while the upside potential may be limited, tilting the risk-reward ratio unfavourably on this winning Canadian tech stock.
Investor takeaway
Celestica entered 2026 with incredible revenue and earnings growth momentum, and a clear path to stronger cash flow generation. Strong investments in AI data centres provide a powerful tailwind that could last for years.
A skeptical investor could say there isn’t much easy money still on the table, especially as speeches from the World Economic Forum in January point towards potentially confrontational geopolitical stances.
That said, new investors buying Celestica stock today are willing to pay a premium price for its high-quality growth story. If you believe the AI infrastructure build-out is still in its early innings in 2026, Celestica stock remains a solid Hold or a Buy on the dips this year. Be prepared for potential volatility spikes over the next 12 months if market developments dictate a re-assessment of the winning stock’s premium valuation multiple.
