Investment Rating - The report maintains a "Positive" investment rating for the communication equipment industry [15]. Core Insights - Major cloud vendors such as Google, Amazon, Microsoft, and Meta reported better-than-expected financial results, driven by strong demand for cloud services and advertising, with significant capital expenditure increases [4][7]. - AI applications are deeply penetrating various sectors, leading to accelerated investments in computing power and infrastructure [7][13]. - The overall trend indicates a robust growth trajectory for AI and computing power, with companies ramping up their capital expenditures to support this growth [13]. Summary by Sections Cloud Vendors: Strong Financial Performance and Demand - Google reported Q2 2025 revenues of $96.43 billion, up 13.8% year-on-year, with a net profit of $28.20 billion, up 19.4% [24][26]. - Amazon achieved Q2 2025 revenues of $167.70 billion, a 13.3% increase year-on-year, with a net profit of $18.16 billion, up 34.7% [34][36]. - Microsoft recorded Q4 FY25 revenues of $76.44 billion, an 18.1% increase year-on-year, with a net profit of $27.23 billion, up 23.6% [43][45]. - Meta's Q2 2025 revenues reached $47.52 billion, a 21.6% increase year-on-year, with a net profit of $18.34 billion, up 36.2% [51][54]. CPU/GPU: Product Iteration and Ecosystem Upgrade - AMD's Q2 2025 revenues were $7.69 billion, a 31.7% increase year-on-year, with a net profit of $0.87 billion, up 229.1% [60][62]. - The client and gaming segments saw record growth, while the data center business faced challenges due to export restrictions [62]. Switches: High-End Volume and Stable Profitability - Arista's revenue growth was driven by its AI Center strategy, with significant increases in AI network revenue [9]. - Celestica's communication market growth was primarily driven by high-performance switches, with revenue and performance outlooks adjusted upwards [9]. Optical Communication & Fiber Optics: Strong Shipments and Scale-Up Acceleration - Lumentum's optical module shipments surged, and coherent optical communication business saw rapid growth [10]. - Corning's optical communication business thrived, driven by enterprise networks, with expectations for significant future growth from scale-up scenarios [10]. Cables: Strong Orders and Active Capacity Expansion - Amphenol reported strong AI-related orders and exceeded expectations in IT data communication business growth [11]. Cooling: High Demand and Accelerated Liquid Cooling Adoption - Vertiv's revenue and profits saw significant growth, with a strong order backlog and upward guidance for the year [12]. Investment Recommendations: Accelerating Business Flywheel and Computing Power - The report recommends several companies across different segments, including optical modules, liquid cooling, fiber optics, and AI applications, highlighting their potential for growth [13].

Industry Overview - The electronics manufacturing services (EMS) industry provides design, engineering, and manufacturing services to electronics original equipment manufacturers (OEMs) and is currently ranked in the top 4% of the Zacks Industry Rank [1] - The industry has delivered a remarkable 102.8% return over the past year and a 48.7% year-to-date return, indicating strong performance and potential for continued outperformance in the next three to six months [2] Company Analysis: Celestica Inc. (CLS) - Celestica Inc. is a leading global EMS provider, offering a wide range of manufacturing and supply-chain solutions tailored to various customer needs [6] - The company is experiencing strong demand in the Connectivity & Cloud Solutions segment, particularly in its Hyperscaler Portfolio Solutions networking business and optical programs [7] - Celestica is well-positioned in the AI infrastructure market, projected to reach $223.45 billion by 2030, with a compound annual growth rate of 30.4% from 2024 to 2030 [8] - For 2025, the Zacks Consensus Estimate indicates revenues of $11.63 billion (up 20.6% year over year) and earnings per share of $5.55 (up 43% year over year) [11] - The short-term average price target for CLS shares suggests a potential increase of 13.3% from the last closing price of $181.34, with a maximum upside of 35.1% [13] Company Analysis: Jabil Inc. (JBL) - Jabil Inc. is a major global supplier of EMS solutions, providing design, production, product management, and after-market services across various industries [14] - The company is benefiting from strong momentum in capital equipment, AI-powered data center infrastructure, cloud, and digital commerce sectors [15] - Jabil plans to invest $500 million to enhance its manufacturing capabilities for the AI data center vertical, strengthening its position in the AI hardware supply chain [17] - For fiscal 2026, the Zacks Consensus Estimate shows revenues of $30.93 billion (up 6.1% year over year) and earnings per share of $11.05 (up 17.8% year over year) [22] - The short-term average price target for JBL shares indicates a potential increase of 14.5% from the last closing price of $204.05, with a maximum upside of 24.9% [23]

Core Viewpoint - Celestica (CLS) shares have recently declined by 10.4% over the past week, but the formation of a hammer chart pattern suggests potential support and a possible trend reversal in the future [1][2]. Technical Analysis - The hammer chart pattern indicates a potential bottoming out, suggesting that selling pressure may be exhausting. This pattern forms when there is a small candle body with a long lower wick, typically occurring during a downtrend [4][5]. - The hammer pattern signals that bears may be losing control, and the buying interest that emerges can indicate a potential trend reversal [5]. Fundamental Analysis - There has been a positive trend in earnings estimate revisions for CLS, with a 12.2% increase in the consensus EPS estimate for the current year over the last 30 days. This indicates that analysts expect better earnings than previously predicted [7][8]. - CLS holds a Zacks Rank of 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises. Stocks with this ranking typically outperform the market [9][10].

Core Insights - Celestica Inc. (CLS) and Jabil Inc. (JBL) are prominent players in the electronics manufacturing services (EMS) industry, with Celestica being one of the largest EMS companies globally, serving various sectors including cloud-based services and business enterprises [1][4] - Jabil is also a major global supplier of EMS solutions, providing a wide range of services across multiple industries such as aerospace, automotive, and telecommunications [2][10] - Both companies are well-positioned to meet the growing demands of artificial intelligence (AI) within the EMS landscape [3][8] Celestica Overview - Celestica has over two decades of manufacturing experience and focuses on delivering cloud-optimized data storage and networking solutions, which are increasingly in demand due to the rise of AI applications [4][5] - The company emphasizes product diversification and aims to strengthen its presence in high-value markets, which enhances business resilience by reducing dependence on any single industry [5] - Despite its strengths, Celestica faces challenges with high research and development costs and stiff competition from other industry giants, which have led to margin pressures [6] Jabil Overview - Jabil operates in 100 locations across 30 countries, benefiting from strong margins and cash flow dynamics, along with extensive end-market experience and technical capabilities [7][10] - The company is expected to see growth driven by AI data center infrastructure and the adoption of 5G and cloud computing, supported by effective supply chain management [10][11] - However, Jabil also contends with a competitive environment and geopolitical tensions that may impact its margins [11] Financial Performance and Estimates - Celestica's 2025 sales and EPS estimates indicate a year-over-year growth of 20.6% and 43%, respectively, with a positive trend in EPS estimates over the past 60 days [12] - In contrast, Jabil's 2025 sales and EPS growth is projected at 0.9% and 10.6%, respectively, with a slight upward trend in EPS estimates [14] - Over the past year, Celestica has outperformed Jabil significantly, with a price increase of 244.1% compared to Jabil's 89.7% [15] Valuation Comparison - Jabil's shares trade at a lower price/earnings ratio of 18.73 compared to Celestica's 29.28, making Jabil appear more attractive from a valuation perspective [15] - Despite Jabil's favorable valuation metrics, Celestica has shown superior revenue and EPS growth, leading to a stronger overall investment case for Celestica at this time [17]

Core Insights - Celestica, Inc. (CLS) has experienced a significant stock surge of 103.4% year-to-date, outperforming the Electronics - Manufacturing Services industry growth of 57.5% and the S&P 500 [1][8] - The company has outperformed peers such as Jabil, Inc. (JBL) and Flex Ltd (FLEX), with Jabil's shares increasing by 45.2% and Flex's by 30% [2] Demand and Revenue Growth - Celestica is benefiting from strong demand in the Connectivity & Cloud Solutions (CCS) segment, with revenues rising 28% year-over-year to $2.07 billion in Q2 [3] - The Hyperscaler Portfolio Solutions (HPS) business saw an impressive 82% year-over-year revenue increase, generating $1.2 billion, driven by demand for 800G networking switches [3] - The CCS segment is projected to achieve 30% year-over-year revenue growth by 2025 [3] AI Infrastructure Market Position - Celestica is establishing itself as a key player in the rapidly growing AI infrastructure market, projected to reach $223.45 billion by 2030 with a CAGR of 30.4% from 2024 to 2030 [4] - The company is expanding its portfolio to capitalize on this market trend [4] Product Innovation - The introduction of the SC6110, a next-generation all-flash storage controller, is designed to support mission-critical applications, enhancing performance and energy efficiency [5] Financial Health - As of June 30, 2025, Celestica reported $313.8 million in cash and cash equivalents, with a current ratio of 1.44, indicating strong liquidity compared to the industry average of 1.15 [9] - In Q2 2025, the company generated $152.4 million in cash from operations, a significant increase from $99.6 million year-over-year, with free cash flow rising 82.8% to $119.9 million [10] Earnings Estimates - Earnings estimates for Celestica for 2025 and 2026 have been revised upward over the past 60 days, reflecting growing investor confidence [11][14] Valuation Metrics - Celestica's shares are currently trading at a premium with a price/earnings ratio of 30.91 compared to the industry average of 22.59 [12] Strategic Positioning - The company benefits from a globally diversified manufacturing network, mitigating geopolitical risks and tariff uncertainties, and has established strategic relationships with leading hyperscaler customers [14] - Collaborations with industry leaders like AMD and Broadcom enhance Celestica's competitive edge in the Electronics Manufacturing Industry [14]

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1]. Company Overview: Celestica (CLS) - Celestica currently holds a Momentum Style Score of B and a Zacks Rank of 1 (Strong Buy), indicating strong potential for outperformance in the market [2][3]. - The stock has shown significant price increases, with a 6.63% rise over the past week compared to the Zacks Electronics - Manufacturing Services industry, which increased by 3.57% [5]. - Over the past quarter, Celestica's shares have increased by 66.19%, and over the last year, they have gained 251.14%, significantly outperforming the S&P 500's increases of 10.12% and 19.99%, respectively [6]. Trading Volume - The average 20-day trading volume for Celestica is 4,351,083 shares, which serves as a bullish indicator when combined with rising stock prices [7]. Earnings Outlook - In the past two months, three earnings estimates for Celestica have been revised upwards, with no downward revisions, leading to an increase in the consensus estimate from $5.05 to $5.55 [9]. - For the next fiscal year, three estimates have also moved upwards, indicating positive sentiment regarding future earnings [9]. Conclusion - Given the strong performance metrics and positive earnings outlook, Celestica is positioned as a promising investment opportunity with a Momentum Score of B and a Zacks Rank of 1 (Strong Buy) [11].

Investment Rating - The report assigns a "Cautious Accumulate" rating to the company [1][24]. Core Insights - The AI ASIC server and Ethernet switch markets are experiencing high demand, positioning the company favorably for rapid revenue growth as projects enter mass production. The transition to ODM is expected to enhance profitability, with profit growth outpacing revenue growth [2][9]. Financial Summary - The company’s projected revenue for FY2023 to FY2027 is as follows: - FY2023: $7,961 million - FY2024: $9,646 million (+21%) - FY2025: $11,630 million (+21%) - FY2026: $14,568 million (+25%) - FY2027: $16,917 million (+16%) [4][16] - Adjusted net profit is projected to grow significantly, with estimates of $296 million in FY2023, $461 million in FY2024, $635 million in FY2025, $819 million in FY2026, and $940 million in FY2027 [4][16]. Business Segments - The company operates in two main segments: Connectivity & Cloud Solutions (CCS) and Advanced Technology Solutions (ATS). The CCS segment includes server and storage businesses, while ATS encompasses aerospace, defense, industrial, and medical technology [26][30]. - Revenue from the ATS segment is expected to grow steadily, while the CCS segment is anticipated to see rapid growth driven by AI demand, particularly in 400G and 800G switches [18][19]. Market Position - The company is a leading player in the EMS and ODM sectors, with a strong focus on high-value end markets. It has a robust project pipeline in AI ASIC and Ethernet switches, which are expected to drive future growth [26][30]. - The company has established a solid customer base, including major clients like Amazon, Dell, and Google, with a significant portion of revenue derived from top customers [30][35]. Valuation - The report employs a DCF valuation method, estimating a target price of $202 per share, corresponding to a market capitalization of $23.4 billion [24][25]. - The company’s PEG ratio is calculated at 1.4, reflecting its strong earnings growth relative to peers in the EMS and ODM industries [22][24].

Company Overview - Celestica is one of the largest electronics manufacturing services companies globally, headquartered in Ontario, Canada, serving original equipment manufacturers and various service providers across multiple industries [11] - The company offers a wide range of manufacturing and supply-chain solutions, including design and development, engineering services, electronics manufacturing and assembly, logistics, and IT asset management [11] Investment Highlights - Celestica holds a 1 (Strong Buy) rating on the Zacks Rank, indicating strong potential for investment [12] - The company has a VGM Score of B, with a Momentum Style Score of A, reflecting its strong performance in the market [12] - Over the past four weeks, Celestica's shares have increased by 23.5%, showcasing significant momentum [12] - Analysts have revised earnings estimates upwards for fiscal 2025, with the Zacks Consensus Estimate rising by $0.50 to $5.55 per share [12] - Celestica has an average earnings surprise of +7.7%, indicating a history of exceeding earnings expectations [12][13]

Group 1 - The article expresses a bullish outlook on Celestica (NYSE: CLS) stock, highlighting its unique market positioning and gradual business model evolution over the past two years [1] - The chief investment analyst, Daniel Sereda, emphasizes the importance of filtering vast amounts of information to identify critical investment ideas [1] - The investment group, Beyond the Wall Investing, provides access to high-quality analysis and insights that institutional market participants prioritize [1] Group 2 - The article does not provide any specific financial metrics or performance data related to Celestica or the broader industry [2]

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