The artificial intelligence (AI) data centre infrastructure is expected to attract US$650 billion in capital spending in 2026. The four hyperscalers investing this amount are Alphabet, Amazon, Meta Platforms, and Microsoft. And catering to three of them is one Canadian company, Celestica (TSX: CLS).
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One Canadian company to make a fortune from the $650 billion data centre boom
Celestica manufactures products like storage, computing, and networking. In its first-quarter earnings, Celestica announced that it will expand its Texas plant to support Google Tensor Processing Unit (TPU) systems. It also announced that it has secured a third hyperscaler client.
Networking accounts for 10% of the data centre cost, and other chips 60% of the cost. In the $650 billion data centre boom, $65 billion is only dedicated to networking, where Celestica operates with its 400G, 800G, and 1.6T Ethernet switches. However, the Ethernet switching space is getting crowded, with Nvidia offering its own networking hardware alongside graphics processors. Then there are players like Broadcom that offer Ethernet switches.
Celestica stands out in the competition by offering original design manufacturing services whereby hyperscalers like Google want custom-built networking and compute systems for their TPUs. Within a $65 billion market, Celestica’s market is a niche.
However, Celestica is deepening its design capabilities in the hyperscaler market by building a complete rackscale compute solution for AI applications. This could increase its addressable market and help it earn more revenue from the same three hyperscaler customers.
The next growth phase of Celestica
Celestica’s Connectivity and Cloud Solutions (CCS) segment caters to Communications, Enterprise, and Hyperscaler clients. This segment is benefiting from the AI data centre boom as its share of total revenue increased to 80%. Within CCS, 60% revenue came from Communications, which offers Ethernet switches.
However, Celestica is now entering the next growth segment and targeting Enterprise, which offers servers and storage solutions. In the first quarter, enterprise revenue surged 101% year over year, and it expects 130% growth in the second quarter.
Celestica’s stock price rallied 740% between September 2024 and April 2026 on the back of Ethernet switches. The next growth phase will be driven by server and storage. It remains to be seen if enterprise solutions can replicate the success of Ethernet switches.
Is it too late to buy the stock of this Canadian company?
Celestica’s stock has slipped 26% in June as the AI space gets crowded with new initial public offerings. However, the opportunity remains intact, and more companies are adding AI capacity beyond the four hyperscalers. The dip is an opportunity to buy Celestica and prepare for the next growth cycle.
How to tap into the AI data centre growth
Diversify your AI portfolio instead of concentrating your money on one stock. Suppose you have allocated $10,000 to invest in the AI boom, consider investing 60% on two individual AI stocks and 40% on ETFs and the AI supply chain.
Celestica and Broadcom could be the AI chip stocks. The iShares NASDAQ 100 Index ETF (CAD-Hedged) will give you exposure to the entire tech landscape of the AI supply chain, from chipmakers to AI module developers to AI applications. You can allocate a small portion to energy infrastructure stocks like Enbridge and Capital Power, which are building power plants for AI data centres.
