Celestica's Valuation Parity with Nvidia: A Warning Sign for Investors

The valuation landscape for technology stocks in 2025 reveals a striking parity between Celestica (CLS) and Nvidia (NVDA), with both companies trading at forward P/E ratios near 31.68 and 30.79, respectively [1][2]. At first glance, this similarity suggests comparable investor expectations for future earnings. However, a deeper analysis of their earnings potential and growth drivers exposes critical divergences that warrant caution for investors.

Earnings Momentum and Guidance Revisions

Celestica has demonstrated exceptional short-term performance, with Q2 2025 adjusted EPS of $1.39 surpassing estimates by 13% and revenue of $2.89 billion exceeding forecasts by 8% [1]. The company raised its full-year guidance to $11.55 billion in revenue and $5.50 in adjusted EPS, reflecting a 14.4% annualized growth rate [2]. Analysts project a 30.15% year-over-year EPS increase to $5.05 in 2025, driven by AI infrastructure demand [1].

Nvidia, by contrast, reported Q2 2026 adjusted EPS of $1.05 (beating estimates by 4%) and revenue of $46.74 billion (surpassing forecasts by 1.5%) [2]. While its Q1 2026 revenue grew 69% year-over-year to $44.1 billion, a $4.5 billion charge from U.S. export restrictions on its H20 product line clouded its financials [2]. Analysts project a more modest 13% statutory EPS increase to $5.28 in 2025 [1].

Valuation Rationality and Risk Asymmetry

Celestica’s forward P/E of 31.68 exceeds its industry average of 21.55 [1], suggesting a premium valuation for a mid-cap contract manufacturer. This premium is partly justified by its 13.15% revenue growth and AI-driven demand, but the company’s reliance on cyclical sectors like networking and semiconductors introduces volatility [1]. Nvidia’s forward P/E of 30.79, while slightly lower, reflects a trailing P/E of 50.9, indicating a disconnect between current valuations and near-term earnings [2]. The market’s optimism about Nvidia’s AI dominance may be overextended, particularly given its recent product challenges.

A Warning for Investors

The parity in forward P/E ratios masks a critical asymmetry: Celestica’s valuation is anchored to near-term growth in AI infrastructure, while Nvidia’s is inflated by speculative bets on long-term dominance. Celestica’s 40.64% price target increase from analysts [1] contrasts with Nvidia’s projected 5-year P/E decline to 27.2x [2], signaling diverging growth trajectories. Investors should scrutinize whether Celestica’s premium valuation is sustainable amid potential sector slowdowns or if Nvidia’s challenges will erode its earnings momentum.

In conclusion, while both stocks trade at similar forward P/E ratios, their earnings fundamentals and risk profiles diverge sharply. Celestica’s valuation parity with Nvidia may not be a sign of strength but a warning of overvaluation in a sector prone to rapid shifts.

Source:
[1] Celestica (CLS) Outperforms Broader Market: What You Need ..., [https://finance.yahoo.com/news/celestica-cls-outperforms-broader-market-214506389.html]
[2] Nvidia (NVDA) Financial Ratios, [https://stockanalysis.com/stocks/nvda/financials/ratios/]