Why Celestica is the Prime Bet for AI Infrastructure Scalability and Profitability

Celestica (CELE) has emerged as a standout player in the AI infrastructure race, leveraging strategic innovations in open networking and hardware scalability to outpace peers like Jabil (JBL) and Flex (FLEX). With AI-driven revenue surging 21% year-over-year to $2.89 billion in Q2 2025, the company is not only capitalizing on the $250 billion AI market but also redefining the economics of data center infrastructure through its integration of Microsoft’s SONiC operating system and leadership in 800G switch technology [1].

Strategic Positioning: Open Networking as a Competitive Edge

Celestica’s adoption of SONiC—a Microsoft-developed open networking OS—positions it as a critical enabler for hyperscalers and enterprises seeking to avoid vendor lock-in. By embedding SONiC into its hardware designs from the outset, Celestica ensures seamless interoperability with cloud-native architectures, enabling customers to deploy BGP routing, RDMA, and other advanced features without proprietary constraints [2]. This approach contrasts sharply with Jabil and Flex, whose recent strategies focus more on thermal management and power solutions rather than open networking ecosystems [3]. For instance, Jabil’s AI infrastructure bets hinge on silicon photonics and liquid cooling, while Flex emphasizes power distribution and regionalized manufacturing [4]. Neither has publicly integrated open-source networking OSes like SONiC, leaving Celestica with a unique value proposition in an era where software-defined flexibility is paramount.

Hardware Leadership: 800G Switches and AI-Ready Innovation

Celestica’s dominance in 800G Ethernet switching further cements its market position. According to the Dell’Oro Group, the company shipped over 1.6 million 800Gbps ports in Q1 2025, securing a top-four spot in the AI-backend Ethernet switching market and the highest share gain of any vendor [5]. Its Hardware Platform Solutions (HPS) within the Connectivity & Cloud Solutions (CCS) segment grew 82% year-over-year in Q2 2025, driven by demand for custom ASIC servers and networking switches from hyperscalers [1]. Products like the 800G Family of Networking Switches and the ES1500 edge AI switch underscore Celestica’s ability to address both cloud-scale and edge AI workloads—a versatility that Jabil and Flex lack in their current portfolios [6].

Margin Expansion and Financial Resilience

Celestica’s financials reflect its operational discipline and pricing power. The company achieved a record 7.4% adjusted operating margin in Q2 2025, outpacing its own guidance and raising full-year revenue expectations to $11.55 billion [1]. This margin expansion—driven by cost efficiencies in original design manufacturing (ODM) and high-margin AI hardware—contrasts with Jabil’s more fragmented business model, where AI-related revenue, though growing 51% year-over-year in Q3 2025, still accounts for just 40% of total sales [7]. Flex, meanwhile, maintains a larger exposure to consumer electronics, diluting its focus on high-growth AI infrastructure segments [8].

The Silent Enabler of Hyperscaler Dominance

Celestica’s role as a “silent enabler” in hyperscaler infrastructure is its most compelling edge. While companies like NVIDIA and AMD dominate headlines for AI chips, Celestica’s networking and data center hardware form the backbone of AI scalability. Its partnerships with Aviz Networks to integrate AI-assisted network management tools like Network Copilot further enhance its offerings, providing enterprises with end-to-end orchestration and visibility [2]. This ecosystem-driven approach aligns with the projected 22.4% CAGR of the AI hardware market, which is expected to reach $210.5 billion by 2034 [6].

Conclusion: A Prime Bet for the AI Era

Celestica’s combination of open networking innovation, 800G switch leadership, and margin resilience positions it as the prime bet for investors seeking exposure to AI infrastructure. While Jabil and Flex are undeniably benefiting from the AI boom, their strategies lack the software-defined flexibility and hyperscaler alignment that Celestica has mastered. As AI workloads grow in complexity and scale, Celestica’s ability to deliver interoperable, high-performance solutions will likely drive sustained outperformance in both revenue and profitability.

Source:
[1] Celestica Announces Second Quarter 2025 Financial Results [https://corporate.celestica.com/news-releases/news-release-details/celestica-announces-second-quarter-2025-financial-results]
[2] Aviz Networks and Celestica Unite to Revolutionize SONiC [https://aviznetworks.com/newsroom/aviz-and-celestica-announce-partnership-to-advance-sonic-networking-solutions/]
[3] AI Stocks: Flex, Jabil Called Alternative AI Hardware Plays [https://www.investors.com/news/technology/ai-stocks-flex-jabil-called-alternative-ai-hardware-plays/]
[4] Flex at Bank of America Conference: Strategic Moves in AI Infrastructure [https://www.investing.com/news/transcripts/flex-at-bank-of-america-conference-strategic-moves-in-ai-infrastructure-93CH-4081903]
[5] Celestica Achieves Key Milestones in Market Share and Growth for Data Center Switching [https://www.celestica.com/blog/article/celestica-achieves-key-milestones-in-market-share-and-growth-for-data-center-switching-according-to-dell-oro-group-report]
[6] Will Growing AI Proliferation Drive Sustainable Growth for Celestica? [https://www.nasdaq.com/articles/will-growing-ai-proliferation-drive-sustainable-growth-celestica]
[7] Jabil (JBL) Taps AI Infrastructure Boom to Boost Earnings Per Share [https://finance.yahoo.com/news/jabil-jbl-taps-ai-infrastructure-234900439.html]
[8] Command the Data Center Lifecycle: AI, Flexibility & ROI [https://flex.com/resources/command-the-data-center-lifecycle-maximize-flexibility-uptime-and-infrastructure-investments-in-the-ai-expansion-boom]