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Why Celestica Stock Jumped Today
Key Points
Celestica's sales are soaring.
Management sees more gains ahead.
Shares of Celestica (NYSE:CLS) climbed more than 12% on Tuesday after the engineering and supply chain solutions provider lifted its full-year profit targets.
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Business is booming
Celestica's revenue soared 83% year over year to $5.8 billion in the third quarter.
The gains were fueled by a 102% surge in its connectivity and cloud solutions revenue to $4.9 billion. Compute and storage-related sales growth was particularly impressive at 242%, driven by rising demand for artificial intelligence (AI) infrastructure from Celestica's large-scale cloud computing customers.
Better still, Celestica's adjusted operating margin improved to 8.5% from 7.6% in the year-ago quarter. Its adjusted earnings per share, in turn, surged 109% to $3.30.
The AI infrastructure race is set to continue
Encouraging ongoing sales trends prompted Celestica to raise its full-year financial guidance. Management now expects revenue to rise by 69% to $21 billion and adjusted earnings to grow 91% to $11.55 per share. That's up from a prior forecast of $20.5 billion and $11.30.
Investors were perhaps even more pleased with the company's outlook for 2027. Celestica expects its revenue and adjusted earnings per share to soar to $40 billion and $21.50, respectively, next year.
"Celestica is well-positioned to continue to support leading hyperscalers and frontier AI labs through the ongoing AI infrastructure supercycle," CEO Rob Mionis said. "The demand environment continues to be very robust, supporting our 2027 revenue outlook, with customer demand forecasts meaningfully higher for 2028."
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Celestica. The Motley Fool has a disclosure policy.