Celestica's Declining Short Interest and Growing Bullish Sentiment Amid AI-Driven Growth

The interplay between market sentiment and structural trends often reveals compelling investment opportunities. In the case of Celestica (CLS), the convergence of declining short interest, robust earnings performance, and a strategic pivot toward AI infrastructure positions the stock as a compelling near-term trade. This analysis explores how short interest-a traditional contrarian indicator-aligns with Celestica's evolving business model to create a scenario where bullish momentum could trigger a self-reinforcing upward trajectory.

Short Interest as a Contrarian Indicator

Short interest in Celestica has trended downward in recent months, with 3.39 million shares sold short as of November 14, 2025, representing 2.96% of the public float. While this figure reflects a slight increase from October's 4.39% short float according to Sahm Capital, the broader context remains favorable. The short interest ratio-1.80 as of early December-suggests that short sellers could cover their positions in approximately 1.8 days, a level consistent with limited bearish conviction. Notably, this ratio is lower than the peer group average of 3.42%, underscoring Celestica's relative strength in investor sentiment.

The moderate short borrow fee rates (0.25–0.31%) further indicate that demand for shorting CLS is constrained. This dynamic is critical for a contrarian thesis: when short interest declines or stabilizes amid strong fundamentals, it often signals that bears are retreating, leaving room for a rally to accelerate. Historically, such scenarios have occasionally led to short squeezes, where rising prices force short sellers to cover positions, amplifying upward momentum. With Celestica's Q3 2025 earnings exceeding expectations by 10.49% and institutional investors upgrading price targets, the conditions for such a catalyst appear increasingly plausible.

AI Infrastructure: A Strategic Catalyst

Celestica's transformation from an electronics manufacturing services (EMS) provider to a key player in AI infrastructure is reshaping its earnings profile and competitive positioning. The company has secured a leading market share in AI-backend Ethernet switching, shipping over 1.6 million 800Gbps ports in Q1 2025 alone. This achievement underscores its role in enabling the transition to 800GbE fabrics, a critical requirement for hyperscale data centers and high-performance computing (HPC) workloads.

Innovations such as the SD6300 ultra-dense storage expansion system and advanced thermal management solutions-designed to address the unique demands of AI accelerators-highlight Celestica's technical depth. These offerings are not merely incremental but foundational to the AI infrastructure cycle. The company's strategic partnerships, including co-development efforts with Broadcom, further solidify its leadership in open networking and high-speed data transmission.

Financially, Celestica's AI-driven growth is translating into tangible results. A 1.6T High-Performance Switching contract and expanding hyperscale capital expenditure trends position the firm to capitalize on multi-year growth in AI infrastructure demand. Analysts at JPMorgan and Goldman Sachs have upgraded their price targets, reflecting confidence in Celestica's ability to sustain revenue and EPS growth.

A Convergence of Fundamentals and Sentiment

The alignment of technical and fundamental factors makes Celestica an attractive proposition. Declining short interest suggests waning bearish sentiment, while strong earnings and AI infrastructure positioning provide a durable foundation for long-term growth. The risk of a short squeeze-though not guaranteed-adds a speculative layer to the trade, particularly if the stock continues to outperform.

However, investors must remain cognizant of risks, including macroeconomic headwinds or sector-specific volatility. Yet, given the current trajectory, Celestica's stock appears to be in a sweet spot where structural growth, institutional confidence, and contrarian dynamics coalesce. For those seeking exposure to the AI infrastructure boom, CLS offers a compelling entry point with both upside potential and a catalyst-driven near-term outlook.