Celestica Inc. (CLS) Surges 4.91% on Earnings Momentum, AI Sector Growth

Celestica Inc. (CLS) surged 4.91% on Friday, marking its third consecutive day of gains, with a cumulative rise of 12.06% over the past three days. The stock reached its highest level since October 2025, with an intraday increase of 6.37%, driven by renewed investor confidence in its strategic positioning and earnings momentum.

Recent earnings and guidance updates have been pivotal in fueling the rally. The company reported Q2 adjusted earnings per share (EPS) of $1.39, surpassing estimates of $1.23, while revenue grew 21% year-over-year. Celestica subsequently raised its full-year adjusted EPS guidance to $1.37–$1.53, reflecting robust demand in AI and industrial automation sectors. Analysts at RBC Capital and Barclays upgraded their ratings to “Outperform” and “Overweight,” respectively, citing the firm’s operational execution and growth trajectory.

Strategic initiatives further bolster investor optimism. Celestica has secured contracts in aerospace, defense, and renewable energy, aligning with global trends toward localized production and supply chain resilience. Its investments in AI infrastructure, including 1.6TbE AI switches, position it to capitalize on the sector’s rapid expansion. Analysts highlight the company’s expertise in high-speed data processing as a competitive advantage in the AI-driven manufacturing landscape.

However, valuation concerns persist. The stock trades at a price-to-earnings (PE) ratio of 63.4x, significantly above industry and peer averages. A discounted cash flow (DCF) model estimates its intrinsic value at $58.29, suggesting a potential overvaluation. Despite this, institutional ownership remains strong at 67.38%, with key holders including Franklin Resources and Norges Bank. Analysts remain divided, with a consensus price target of $174.75 implying a 29.5% downside from current levels.

Market sentiment has improved, as short interest declined by 15.8% in the past month, and positive news coverage underscores strategic partnerships and AI infrastructure investments. Celestica’s MarketRank™ score of 216 places it in the 77th percentile in the tech sector, reflecting confidence in its operational excellence and innovation. While risks such as valuation pressures and macroeconomic volatility remain, the company’s alignment with AI and industrial automation trends continues to attract long-term investors.