Valued at a market cap of $60 billion, Celestica (TSX: CLS) is among the largest companies in Canada. Over the past 10 years, the TSX tech stock has returned close to 4,000% to shareholders. However, it also trades 20% below all-time highs, allowing you to buy the dip.
The Toronto-based electronics manufacturing services company just reported one of the strongest quarters in its history. For long-term investors who believe in the AI infrastructure buildout story, Celestica should be part of your watchlist.
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The bull case for this TSX tech stock
Celestica designs and manufactures some of the most advanced networking and computing hardware, primarily for the world’s largest hyperscalers.
When Microsoft, Amazon, Google, and Meta race to build data centres, Celestica delivers the switches and servers that run them.
In the first quarter of 2026, Celestica’s Connectivity and Cloud Solutions segment, which covers networking and AI compute, grew revenue by 76% year over year to $3.2 billion. Its hardware platform solutions business generated $1.7 billion in a single quarter, growing 63%.
CEO Rob Mionis told analysts during the company’s April 28 earnings call that the awarded backlog and opportunity pipeline are “the strongest they have ever been during my tenure as CEO.”
Management raised its full-year 2026 revenue outlook to $19 billion, representing 53% growth over 2025. It also raised its adjusted EPS outlook to $10.2, indicating 68% YoY growth.
CFO Mandeep Chawla told analysts that Celestica expects to grow revenue by more than $6.5 billion in 2027, setting a floor for next year’s revenue at around $25.5 billion.
He said 800G networking demand remains strong into next year, 1.6T switches are entering heavy production ramps with 10 active programs, and two new hyperscaler compute programs are set to begin mass production.
Additionally, Celestica won a landmark program award for a 1.6T co-packaged optics Ethernet switch. It also announced a collaboration with AMD on the Helios rack-scale AI architecture. These are not speculative wins.
Is the TSX tech stock still undervalued?
Celestica management has acknowledged that component constraints have increased in recent months, with tight supply in custom silicon, memory, and high-layer printed circuit boards.
However, Mionis was clear: the demand is durable, and suppliers are adding capacity at a fast pace.
Critically, Celestica has secured commitments from its suppliers to support the full-year outlook it just raised. It also amended its credit facility, increasing its revolver to $1.75 billion and extending maturities to 2031. The company has over $2 billion in available liquidity.
The free cash flow outlook of $500 million for 2026 was reaffirmed, even after absorbing $1 billion in planned capital expenditures to expand production capacity in Thailand and Texas.
Analysts tracking the tech stock forecast that earnings would grow from $6.05 per share in 2025 to $19 per share in 2028. If CLS stock is priced at 35 times forward earnings, which is reasonable given its growth forecast, it could surge close to 80% within the next 18 months.
Celestica is a company investing aggressively because it sees years of runway ahead. I think Celestica stock at current levels is a solid long-term opportunity. The 20% pullback is a gift for investors who are willing to look past short-term noise and focus on the multi-year earnings growth story taking shape.
