Up 37% in the Last 6 Months, Is There Any Upside Left in This Hot Network Stock?

Electronics component designer Celestica ( CLS ) is currently cashing in on the artificial intelligence (AI) boom by supplying tech giants with Ethernet switches and other equipment. The investment turned the tide for Celestica, making it a leading supplier of 800 Gbps Ethernet switches to hyperscale technology giants.

The company also has a long-standing partnership with chip giant Advanced Micro Devices (AMD), positioning it as the successor to AMD’s multi-year partnership with Meta Platforms (META), where the telecommunications giant is expected to spend “double-digit billions” per gigawatt on AMD chips and devices.

With Celestica’s stock up 37% in the past six months, is there anything left in it, especially as cash flows in on demand for the hyperscaler?

Based in Toronto, Canada, Celestica specializes in design, manufacturing, supply chain management, and aftermarket services. It operates a global network of sites, serving industries such as aerospace, defense, telecommunications, business, health, industrial, and smart energy.

The company works with leading companies to oversee the entire product life cycle, from initial ideas and production to fulfillment and ongoing support. Celestica has a market capitalization of $32.1 billion.

Celestica’s stock has been reaping the benefits from AI hyperscaler demand and a strong earnings beat. Over the past 52 weeks, the stock has gained 157.4%, and over the past six months, it has gained 37.4%. On the other hand, the stock has fallen slightly this year. Shares had hit a 52-week high of $363.40 on Nov. 2025, but decreased by 23.6% from that level.

On a forward-adjusted basis, Celestica’s price-to-earnings ratio of 35.21x is higher than the industry average of 22.26x.

On Jan. 28, Celestica reported strong results for the fourth quarter of fiscal 2025, exceeding expectations by a healthy margin. The company’s revenue increased 43.6% year-over-year (YOY) to $3.65 billion, exceeding its guidance range of $3.33 billion to $3.58 billion.

Connectivity & Cloud Solutions (CCS), which combines its communication and enterprise markets (servers and storage) did the hard work, generating $2.86 billion in revenue. The segment’s margin was 8.4%, up from 7.9% in the year-ago period. Celestica’s non-GAAP EPS was $1.89, up 70.3% YOY and above the company’s guidance range of $1.65 to $1.81.

Celestica’s results are coming in hotter than expected, leading the company to raise its outlook this year. It raised its 2026 revenue outlook by $1 billion to $17 billion, while its adjusted EPS outlook was raised from $8.20 to $8.75.

In addition, the company envisions serving its large customers with long-term AI investments, with multi-year roadmaps. Celestica plans to expand its manufacturing capacity in the US (scheduled to be completed by 2027) to strengthen its ability to support the production of complex data center hardware, including Google Tensor Processing Unit (TPU) systems. So, it’s no surprise that capex is expected to be higher this year, around $1 billion, or about 6% of current annual revenue.

Wall Street analysts are optimistic about Celestica’s bowlline trajectory. For the current quarter, its EPS is expected to grow 96% YOY to $1.96. For fiscal 2026, the company’s EPS is expected to increase 49.9% annually to $8.35, followed by a 45% increase to $12.11 in fiscal 2027.

Following Q4 earnings, analysts at Barclays maintained an “Overweight” rating on Celestica stock and raised their price target from $359 to $391. In addition, analysts pointed out that the company’s upgrade of its financial outlook is prudent and that further revisions may be made this year.

They are also optimistic about the company’s growing exposure to high-growth markets connected to next-generation computing infrastructure. On the other hand, Citigroup analyst Atif Malik lowered the price target from $375 to $338, while maintaining a “Buy” rating.

Celestica is getting praise from Wall Street, with analysts giving it a consensus rating of “Strong Buy” overall. Out of 18 analysts rating the stock, a majority of 15 analysts have given it a “Strong Buy” rating, one analyst rated it “Average Buy,” while two analysts take a middle-of-the-road approach with “Hold” rating. The consensus price target of $361.40 represents a 30.2% upside from current levels. The high street price of $430 represents an upside of 54.9%.

As of the date of publication, Anushka Dutta had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com