Synthetic intelligence (AI) is reworking the whole lot, from how we store to how firms construct their merchandise. It’s simple to suppose the winners are all flashy tech giants or chipmakers, however Canada has its personal gamers flying underneath the radar. One in every of them is Celestica (TSX:CLS), a tech inventory that’s quietly changing into a high development story within the AI revolution.
About Celestica
Chances are you’ll not hear about it typically, however Celestica has been constructing the spine of tech infrastructure for years. It began as a contract electronics producer, supplying elements to big-name purchasers. Over the past decade, it has shifted towards higher-margin, high-performance computing methods. And now, it’s taking part in a key function within the AI growth.
In its first quarter 2025 earnings, Celestica as soon as once more blew previous expectations. The tech inventory reported income of $2.65 billion, up from $2.21 billion the yr earlier than. Earnings per share (EPS) got here in at $1.20, up from $0.83 final yr. Even higher, administration confirmed full-year steerage, citing continued sturdy demand for its AI-related {hardware} and cloud infrastructure.
That form of development isn’t a one-time factor. Celestica is now a go-to companion for hyperscalers, these huge firms operating the largest cloud knowledge centres on the earth. As AI continues to require extra processing energy and energy-hungry servers, Celestica is there, designing, constructing, and scaling the methods behind all of it. In different phrases, it’s not only a bystander within the AI revolution – it’s serving to construct the sector.
Extra to come back
Regardless of all this momentum, the tech inventory nonetheless trades at a comparatively low valuation. As of writing, Celestica trades at 46 occasions ahead earnings. That’s a serious low cost in comparison with U.S. tech friends, with comparable and even slower development. So whereas markets chase the large names, Celestica provides a extra modest, grounded approach to experience the identical wave.
There’s additionally one thing to be mentioned about how well-run the corporate is. It’s not racking up huge debt or burning by way of money. In reality, Celestica continues to put up sturdy money flows and has a strong stability sheet. That provides it the pliability to put money into future development whereas weathering any financial slowdown. And in contrast to many tech names, it doesn’t must preserve elevating capital to remain afloat.
The opposite energy that stands out is its diversification. Whereas AI and knowledge centres are the fastest-growing elements of the enterprise, Celestica additionally serves industrial, aerospace, and defence purchasers. That provides it some stability when one section cools off. However proper now, all indicators counsel the AI-related tailwinds aren’t going away anytime quickly.
Backside line
In fact, no inventory is ideal. Celestica isn’t proof against world provide chain dangers or tech sector slowdowns. And since it’s nonetheless categorized by many as a “boring” {hardware} inventory, it may not get the eye – or premium valuation – it deserves within the brief time period. However in case you’re investing with a multi-decade mindset, that’s precisely the form of setup you need: sturdy fundamentals, huge long-term tailwinds, and a inventory worth that hasn’t caught up but.
For buyers prepared to be early and affected person, Celestica may very well be a type of uncommon shares you look again on many years later and suppose, “I can’t consider how low cost it was.” In a market filled with hype, it’s refreshing to discover a firm that’s merely doing the work and getting higher quarter after quarter. That’s why, for me, Celestica is the last word AI development play for the lengthy haul.