Celestica is not a name most people talk about at dinner. But if you follow AI stocks, it should be on your list. The latest numbers are strong, and the story has some twists too, including a big share sale in August.
What does Celestica do?
Celestica is a Toronto based company that designs and builds hardware for data centers. Its biggest unit, Connectivity and Cloud Solutions, covers networking switches, AI compute systems, and storage for the largest cloud companies. The smaller unit, Advanced Technology Solutions, serves aerospace, defense, industrial, health tech, and capital equipment customers.
Think of it as the company that builds the pipes and racks inside AI data centers.
Celestica’s latest quarter
Celestica reported Q2 2026 results on July 27. Revenue hit $4.70 billion, up 62% from $2.89 billion a year earlier. Q1 revenue was $4.05 billion, so revenue grew about 16% from one quarter to the next.
Earnings per share followed the same path. Adjusted EPS was $2.54, compared to $1.39 a year ago. In Q1 it was $2.16, so EPS grew roughly 18% quarter over quarter and 83% year over year. GAAP EPS was $3.17, but part of that came from a swap gain, so the adjusted number is the cleaner one to watch.
How is the cash flow?
It improved. Cash from operations was $410.9 million in Q2, up from $152.4 million a year ago. Free cash flow was $147.1 million, up from $119.9 million. It did not rise as fast because spending on equipment jumped.
For the year, management now expects free cash flow of $600 million, up from $500 million.
Celestica spending, funding, and cash runway
Growth costs money. Celestica plans about $1 billion of capital spending in 2026 and is expanding sites in Thailand, Japan, and Texas. A rough placeholder for 2027 is $1.5 billion. Spending is already running at about $260 million per quarter.
At the end of June, cash was $535.7 million, against roughly $810 million of borrowings. Then came the big move. In August, Celestica priced an equity offering of 9,677,419 shares at $310 each, for about $3 billion. The money is meant for working capital and capital spending.
My math: the raise roughly covers the planned 2026 and 2027 spending combined, so cash runway is not a worry. The cost is dilution of about 8% in share count. The stock dropped after the news.
Technology: near term, long term, and the goal
Short term, the story is faster networking. The CEO said there are 10 active 1.6T programs, while 800G and 400G products keep growing. The 1.6T programs begin production in the second half of 2026.
Long term, the bigger prize is AI compute. Management pointed to new programs with OpenAI, AMD, and Broadcom, including custom accelerator racks. Management expects these to scale in 2027.
The goal is clear. Celestica wants to be a core design and build partner for AI data centers, not just a contract assembler. The CEO said capacity planning is already set for 2026 and 2027.
Is it on track? So far, yes. Q2 revenue and adjusted EPS both landed above the high end of guidance. Back in October 2025, the 2026 outlook was $16 billion in revenue. It is now $20.5 billion. The main limit is not demand. It is component supply.
Supply is the part to watch. Celestica says demand is not the problem, parts are. AI compute systems need a lot of memory, and memory makers know it. Many of them are now signing long term agreements to lock in customers for years. That shows how tight supply is across the AI chain. It also explains why Celestica has to plan its capacity so far ahead.
Guidance
Near term, Q3 revenue is guided to $5.25 billion to $5.55 billion, with adjusted EPS of $2.88 to $3.08.
For the full year, the outlook is $20.5 billion in revenue, $11.30 in adjusted EPS, and an 8.4% adjusted operating margin. That implies growth of 65% in revenue and 87% in EPS.
Longer term, management expects 2027 revenue growth to beat 65%, with EPS growing even faster. There is no formal target past 2027.
What are institutions doing?
Big money is clearly involved. MarketBeat shows institutions own about 67% of the stock, and 606 institutions held shares over the past two years. They bought about 47 million shares in the last 24 months.
Why Celestica may be worth a look
Growth is the first reason. Revenue is up 62% and still accelerating, with guidance pointing to even faster growth in 2027.
Quality is the second. Margins are at record highs, and the return on invested capital was 55.5% in Q2 on the company’s own measure.
Funding is the third. Free cash flow is positive, and the $3 billion raise removes most financing worries.
Visibility is the fourth. Ten separate 1.6T programs spread the risk across many projects instead of one.
Celestica stock price targets from Wall Street
Wall Street is bullish on Celestica. Every analyst in my table rates it a Buy.
The highest target is $535 from Susquehanna. The lowest is $375 from FBN Securities. The average sits near $465, about 47% above the recent price.
Targets are opinions, not promises, so keep watching the next earnings report.
What to watch
Dilution is real. Component shortages could slow shipments. Customers are concentrated among a few giant cloud and AI names, so a pullback in their spending would hit hard. Leadership is also changing, with a new structure starting October 1.
Q3 results are due soon, so the next update will test whether the guidance holds.
Disclosure: The author holds a long position in $CLS stock at the time of writing
Sources: Investing.com, Celestica, Tradingview, MarketBeat
