Is Celestica (CLS) Poised for Sustained Growth in the AI-Driven Data Center Boom?

The AI-driven data center boom has become one of the most transformative forces in global technology, with infrastructure providers like Celestica (CLS) at the forefront. As hyperscale demand accelerates, investors are scrutinizing whether CLS's recent momentum is durable or a fleeting surge. This analysis evaluates Celestica's financial performance, product innovation, and guidance revisions against peers Jabil (JBL) and Flex (FLEX), while assessing valuation metrics to determine its long-term investment potential.

Financial Performance: Outpacing Peers, But Can It Last?

Celestica's Q3 2025 results underscore its dominance in the AI infrastructure sector. Revenue surged 28% year-over-year to $3.19 billion, driven by a 43% growth in its Connectivity & Cloud Solutions (CCS) segment, which now accounts for 76% of total revenue according to the company's announcement. Adjusted operating margins hit a record 7.6%, reflecting efficient cost management and favorable pricing dynamics as reported. For context, Jabil's Intelligent Infrastructure segment, which includes AI infrastructure, reported $12.3 billion in revenue for fiscal 2025 but with core operating margins of just 5.4%. Flex, meanwhile, posted a 4% year-on-year revenue increase to $6.8 billion in Q3 2025 but maintained a 4.4% operating margin, unchanged from the prior year.

Celestica's outperformance is partly due to its strategic focus on high-margin AI projects. The company raised its 2025 revenue guidance to $12.2 billion and adjusted EPS to $5.90, surpassing both Wall Street estimates and its own previous forecasts. By contrast, Jabil's 2025 revenue guidance of $29 billion includes AI-related revenue of $9 billion, up from $5 billion in 2024, while Flex's 2025 guidance midpoint of $27 billion reflects a 1.9% upward revision as noted in the Q3 report.

Product Innovation: A Critical Edge in AI Infrastructure

Celestica's product pipeline reinforces its competitive position. In 2025, the company launched the DS6000 and DS6001 1.6TbE data center switches, designed for AI/ML clusters with 102.4Tbps switching capacity. These innovations align with the projected 25.85% CAGR in the AI data center market from 2025 to 2030. Additionally, the SD6300 ultra-dense storage system addresses AI's soaring data ingest and archiving needs.

Jabil, while also expanding its AI infrastructure portfolio, has focused on partnerships and large-scale deployments rather than product differentiation. Its AI-related revenue is expected to double to $11.2 billion in 2026, but its product mix remains less vertically integrated compared to Celestica. Flex, on the other hand, has leveraged its "grid to chip" platform to secure collaborations with NVIDIA and Amazon, but its innovation pipeline appears less hardware-centric than Celestica's.

Guidance and Market Confidence

Celestica's 2026 guidance-$16 billion in revenue and $8.20 in adjusted EPS-reflects confidence in sustained hyperscale demand. This compares to Jabil's 2026 revenue target of $32.4 billion, with AI infrastructure contributing $11.2 billion, and Flex's 2025 guidance of $27 billion, with data center growth expected to outpace industry trends by 35% as detailed in the Q3 analysis. While all three companies are optimistic, Celestica's sharper revenue and margin growth suggests a more aggressive capture of the AI infrastructure market.

Valuation: A Premium for Growth, or a Bubble?

Celestica's valuation metrics highlight its premium status. As of December 2025, the stock trades at a forward P/E of 29.28 and a P/S ratio of 3.09, significantly higher than Jabil's forward P/E of 18.73 and P/S of 0.84 as reported in the comparison, and Flex's P/E of 27.14 and P/S of 0.89 according to stock analysis. This premium reflects market expectations of continued outperformance but raises questions about sustainability. Jabil's lower valuation, despite slower growth, may appeal to investors prioritizing margin stability and capital discipline as noted in the valuation analysis. Flex's metrics, meanwhile, suggest a balance between growth and affordability.

Competitive Dynamics and Risks

Celestica's durability hinges on its ability to maintain product innovation and customer retention. Its hyperscale clients, including cloud providers and AI chipmakers, are critical to long-term demand. However, Jabil's disciplined capital allocation and Flex's regional resilience e.g., manufacturing in lower-cost markets pose competitive threats. Risks for Celestica include margin compression from pricing pressures, supply chain bottlenecks, and the potential for market saturation in AI infrastructure.

Conclusion: A Strong Case for Long-Term Investment

Celestica's financial performance, product innovation, and guidance revisions position it as a leader in the AI infrastructure boom. While its valuation is elevated compared to peers, the company's execution track record and alignment with multi-year growth trends justify the premium. Investors should monitor its ability to sustain margin expansion and navigate competitive dynamics. For those with a long-term horizon, Celestica offers a compelling blend of growth and strategic differentiation in a sector poised for decades of demand.