Celestica Stock Dips as the AI Trade Unwinds: Can Earnings Turn It Around?

Celestica (NYSE:CLS) stock has suffered a sharp reversal in recent months as the artificial intelligence (AI) trade has begun to unwind. Its US-listed shares ended the week at $260, down 45% from their year-to-date high. Technicals suggest the sell-off may continue after the company publishes its earnings.

Celestica’s Earnings Expected to Show Strong Growth

Celestica is a top Canadian company that manufactures products across areas like memory, storage, compute, and networking. It partners with companies across various industries, with hyperscalers being its biggest customers. 63% of its business comes from three companies, including Meta Platforms (NASDAQ:META), Alphabet (NASDAQ:GOOG),  and Amazon (NASDAQ:AMZN).

These partnerships have made it one of the fastest-growing Canadian companies. Its upcoming earnings are expected to show that its revenue continues to grow because the AI boom is continuing. Its biggest customers have also committed to continue spending this year. 

Benzinga data shows that analysts expect the upcoming results to show that its revenue jumped 71% to $5.4 billion in the third quarter. Its earnings-per-share (EPS) is expected to move from $1.58 in Q3’25 to $2.97. Also, the forward guidance for the year is expected to show that its revenue will be $20 billion, up by 66% from what it made last year. 

The challenge, however, is that strong earnings have not led to a surge in top companies. For example, Bloom Energy (NYSE:BE) stock dropped by double digits even as its revenue and profits soared. Meta Platforms also dropped after its earnings, with investors focusing on its negative cash flow. 

The options market shows that the company’s implied volatility has jumped to 136%, more than double the historical average of 64%. Most of the calls are concentrated at $272, higher than the current $260. Most of the puts are at $250, with the put/call ratio being 1.12, a sign that many traders expect its stock to drop.

Celestica Stock Technical Analysis

CLS stock chart | Source: TradingView

The daily chart shows that Celestica stock has slumped in the past few days. It has dropped below the crucial support level of $273, its lowest level on September 2, invalidating the double-bottom pattern. 

The stock is about to form a death cross pattern as the spread between the 50-day and 200-day moving averages narrows. Also, the Average Directional Index (ADX) has risen to 29.20, a sign that the sell-off is accelerating. Therefore, the stock will likely continue falling as sellers target the psychological level of $200.

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