Celestica Inc. (CLS:CA) UBS Upgrades Rating and Valuation Forecast

Celestica Inc. (CLS:CA)

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UBS Securities upgraded Celestica’s stock today to a “Buy” rating from a “Neutral”,  and raised its 12 month price target to C$595 from C$568, reinforcing the bullish outlook for the Canadian technology company. The upgrade reflects growing confidence in Celestica’s exposure to the rapidly expanding artificial intelligence infrastructure market, where the company provides networking, computing, connectivity and other infrastructure solutions to major technology customers.

The investment thesis for Celestica is increasingly tied to the continued expansion of AI data centres and the significant capital spending required to support next-generation computing workloads. Rather than competing directly in the development of AI chips, Celestica benefits from the broader infrastructure buildout by supplying the hardware platforms, networking equipment and engineering capabilities required to deploy AI systems at scale.

Celestica’s recent financial performance provides substantial support for the bullish thesis. The company reported US$4.70 billion in second-quarter 2026 revenue, representing 62% year-over-year growth, while adjusted earnings per share increased 83% to US$2.54. Adjusted operating margin also reached a record 8.2%, demonstrating that the company is not only growing rapidly but is also converting higher revenue into stronger profitability.

Management has also raised its expectations for the full year, with Celestica now forecasting approximately US$20.5 billion in 2026 revenue and US$11.30 in adjusted EPS. Revenue is expected to increase by roughly 65%, while adjusted EPS is projected to rise by approximately 87%. The company has also raised its adjusted operating-margin outlook to 8.4% and expects approximately US$600 million in free cash flow for the year.

The outlook becomes even more interesting when looking beyond 2026. Management expects revenue growth to accelerate further in 2027 as new customer programs ramp up, while earnings growth is expected to continue benefiting from improving margins and a more favorable business mix. This creates an important part of the Celestica investment case because investors are increasingly looking beyond the company’s current earnings and focusing on the sustainability of its AI-driven growth.

However, the market has already recognized the company’s AI exposure, accelerating revenue growth and improving profitability, which means expectations are now considerably higher. As a result, the stock could become more sensitive to any signs that AI-related spending is slowing or that customer programs are being delayed. As a warning factor, the biggest risk to the bullish thesis is therefore execution relative to expectations, in which Celestica is forecasting extremely strong growth, with revenue expected to increase by approximately 65% and adjusted EPS by approximately 87% in 2026. While these numbers are impressive, they also establish a high benchmark that the company will need to meet or exceed to support further valuation expansion.

UBS Securities double upgrade strengthens the bullish case for Celestica’s stock, alongside the combination of rapid revenue growth, accelerating earnings, strong AI infrastructure demand, improving margins and expectations for further growth in 2027 makes Celestica one of the more compelling Canadian technology stocks tied to the AI investment cycle, accompanied with elevated valuation risks from within the sector.