Core Insights - Celestica has transitioned from being a contract manufacturer to a design-centric platform integrator, focusing on key control points in AI data centers [1] - The company is expanding its hardware platform portfolio and enhancing its regional rack-build capabilities [1] Company Overview - Celestica is now involved in high-bandwidth switching, compute, storage, and rack-scale integration within AI data centers [1] - The company is recognized as an "AWS Certified AI Practitioner Early Adopter," indicating its commitment to advanced AI and machine learning technologies [1] Industry Position - The shift towards a design-centric model positions Celestica favorably in the growing AI data center market, which is increasingly reliant on integrated hardware solutions [1] - The expansion of its capabilities aligns with industry trends towards more sophisticated AI applications and infrastructure [1]

Core Insights - Celestica Inc. (CLS) and Pinterest, Inc. (PINS) are significant players in the technology sector, each with distinct expertise in electronics manufacturing services and visual recommendation platforms respectively [1][2] Celestica Overview - Celestica is a leading firm in the electronics manufacturing services (EMS) industry, providing a wide range of manufacturing and supply-chain solutions to various sectors including cloud services and original equipment manufacturers [1] - The company has over two decades of manufacturing experience and is focused on delivering cloud-optimized data storage and networking solutions, driven by the increasing demand for AI-based applications [4] - Celestica's product diversification and presence in high-value markets enhance its business resilience, reducing dependence on any single industry [5] - Despite its strengths, Celestica faces challenges with high operating expenses and stiff competition from major players like Foxconn and Flex, which have impacted its profit margins [6] Pinterest Overview - Pinterest offers a platform for users to save and organize visual recommendations, generating revenue through advertisements targeted at millennials and Gen Z [2][7] - The company is enhancing its advertising platform to provide unique value propositions for advertisers, including the Verified Merchants Program that allows brands to showcase shoppable products [7] - Pinterest is focusing on operational improvements and AI integration to enhance ad relevancy and personalization, which is expected to yield long-term benefits [8] - However, Pinterest anticipates a significant increase in operating expenses as it expands its operations and product offerings, facing competition from both larger and smaller firms [10] Financial Performance and Estimates - The Zacks Consensus Estimate for Celestica's 2025 sales and EPS indicates year-over-year growth of 26.3% and 52.1% respectively, with EPS estimates trending upward [11] - In contrast, Pinterest's 2025 sales are expected to grow by 16.1%, with EPS estimates showing a downward trend of 8.9% [12] - Over the past year, Celestica's stock has increased by 227.2%, outperforming the industry growth of 91.6%, while Pinterest's stock has declined by 18.2% [13] Valuation Comparison - Celestica appears more attractive from a valuation perspective, with a price/sales ratio of 2.06 compared to Pinterest's 3.54 [15] - Celestica holds a Zacks Rank of 1 (Strong Buy), while Pinterest has a Zacks Rank of 4 (Sell), indicating a more favorable investment outlook for Celestica [16] Conclusion - Both companies expect improvements in sales and earnings for 2025, but Celestica has demonstrated sharper revenue and EPS growth, making it a more appealing investment option compared to Pinterest [17]

Core Insights - The discussion emphasizes a "barbell approach" to investing during periods of market volatility, focusing on both high dividend income stocks and AI growth stocks to balance risk and return [9][10][41]. Investment Strategy - The quant system used by the company allows for a broader analysis of approximately 4,500 stocks, compared to traditional analysts who typically cover only 15 to 20 stocks [15][12]. - The quant model incorporates a GARP (Growth at a Reasonable Price) approach, focusing on momentum and positive analyst revisions, which enhances diversification and minimizes risk [13][14]. Market Conditions - Recent market volatility has been influenced by factors such as the government shutdown and uncertainty regarding Federal Reserve interest rate cuts, leading to a rotation towards safer sectors like energy and utilities [21][24][26]. - The CNN fear and greed index indicates a shift from greed to extreme fear in market sentiment, suggesting a cautious outlook among investors [30]. Stock Recommendations Dividend Income Stocks - **Merck (MRK)**: A strong buy with a market cap of $230 billion, a 40% return on equity, and a forward PE of 10.4 times, indicating it is undervalued compared to its sector [43][44][50]. - **Alpine Income Property Trust (PINE)**: A REIT with a market cap of $252 million, offering a forward yield of 6.94% and ranking highly within its sector [51][52]. - **OneMain Holdings (OMF)**: A financial company with a market cap of $6.7 billion, providing a yield of 7.36% and strong growth metrics [64][65]. AI Growth Stocks - **Micron Technology (MU)**: A large-cap company with a market cap of $271 billion, showing significant growth and improved valuation metrics, with a revenue growth rate of 34% [68][70]. - **CommScope Holdings (COMM)**: A smaller company in the communications sector, with a market cap of $3.69 billion, demonstrating strong profitability and growth metrics [73][76]. - **Celestica (CLS)**: A company in the electronic manufacturing services sector, with a market cap showing substantial growth and improved profitability metrics [78][80]. Performance Metrics - The Seeking Alpha quant strong buys have outperformed Wall Street analysts and the S&P 500 over the past five years, with a return of 219% compared to 33% for Wall Street [19]. - The average yield of the recommended dividend stocks is 5.93%, significantly higher than the S&P 500's average yield of 1.1% [81].

Core Insights - Celestica's share price has increased by 60% since the last bearish call, indicating that the stock is now considered even more overvalued [1] Company Analysis - The previous multiples analysis did not yield favorable results, suggesting a need for reevaluation of the company's valuation metrics [1] - The company has a strong background in finance, particularly in the oilfield and real estate industries, which may influence its strategic decisions and market positioning [1] Investment Context - The analysis is informed by over a decade of experience in finance, including complex due diligence and M&A transactions, which adds credibility to the insights provided [1] - The focus on equity research and analysis of public companies indicates a shift towards a more analytical approach in evaluating investment opportunities [1]

Core Insights - Celestica has gained significant attention from institutional investors, with $6.32 billion in inflows and $4.28 billion in outflows over the past year, indicating strong interest from smart money [1] - The company has seen a substantial increase in revenue and earnings, with a 28% year-over-year revenue growth to $3.19 billion and a 52% increase in adjusted EPS to $1.58 in Q3 2025 [5] - Celestica is well-positioned in the high-performance technology hardware market, particularly benefiting from the transition to 800G switches and strong demand for AI compute systems [6][7] Financial Performance - Celestica's market capitalization stands at $32 billion, with a current stock price of $280.06 [4] - The company has raised its full-year 2025 revenue guidance from $11.55 billion to $12.2 billion and adjusted EPS outlook from $5.50 to $5.90 [5] - Projected revenue for 2026 is $16 billion, reflecting a 31% year-over-year growth based on 2025 guidance [5] Market Position and Demand - Celestica holds over a 50% market share in the Ethernet switch market, indicating a strong competitive position [6] - The company is expected to benefit from a 1.6T networking upgrade cycle and confirmed demand from hyperscalers for the next 12 to 15 months [7] - Future engagements, including mass production of a custom AI system, could potentially add "multiple billions of dollars" in revenue by 2027 [7] Growth Catalysts - The demand for Celestica's application-specific integrated circuit (ASIC)-based AI compute systems is robust, driven by major hyperscalers [6] - The company is positioned to capitalize on the ongoing shift in technology infrastructure, making it an attractive investment in the AI sector [8]

Group 1 - Celestica (CLS) stock experienced a significant decline, dropping nearly 10% and falling below the 21-day moving average, indicating a bearish trend [1] - Analysts suggest that Celestica is unlikely to retest its 52-week high of 360 in the near future, leading to the recommendation of a bear call spread strategy for options trading [1] - The overall sentiment in the market indicates that Celestica's stock may not recover soon, as evidenced by its recent performance and analyst outlook [1] Group 2 - There is a notable increase in capital expenditures on data centers for artificial intelligence, which is expected to positively impact the technology sector, particularly computer gear manufacturers [2] - The surge in AI-related spending is likely to benefit various stocks within the tech stack, indicating a broader trend in the industry [2]

Core Insights - Tradr ETFs has launched options trading on four newly listed leveraged ETFs, allowing traders to express their views on stocks related to AI infrastructure [1][2] - The ETFs include Tradr 2X Long BE Daily ETF (BEX), Tradr 2X Long CLS Daily ETF (CSEX), Tradr 2X Long NNE Daily ETF (NNEX), and Tradr 2X Long SNPS Daily ETF (SNPX) [9] - BEX has shown strong performance with a first-day trading volume of nearly 600,000 shares, indicating high trader interest in AI infrastructure investments [2] Company Overview - Tradr ETFs focuses on sophisticated investors and professional traders, offering leveraged and inverse ETFs for short or long exposure to actively traded stocks [3] - The company aims to provide tools for investors to take high conviction views on transformative investment themes [2] Market Context - The introduction of options trading on these ETFs provides investors with additional instruments to capitalize on the growing AI infrastructure sector [2] - The leveraged nature of these ETFs means they are designed for short-term trading and may carry higher risks compared to traditional ETFs [4][5]

Summary of Key Points from the Conference Call Industry Overview - **Industry Focus**: IT Hardware and Communications Equipment, specifically custom ASICs, servers, PCs, and smartphones [1][2][3] Core Insights - **Custom ASICs Growth**: Strong positive sentiment regarding custom ASICs, particularly in AI servers, with expectations for a better long-term compound annual growth rate (CAGR) for general-purpose servers [2][4] - **Power Solutions**: Increasing importance of power management solutions in AI racks, with companies focusing on integrating full compute racks [2][9] - **PC and Smartphone Stability**: The PC market appears stable, while iPhone production remains unchanged, with no significant upward revisions expected [2][13] Company-Specific Insights Celestica Inc. (CLS) - **TPU Contribution**: CLS is expected to be the primary EMS partner for TPU, with projections indicating that TPU will represent 70-75% of the Enterprise segment by 2025 [5][21] - **Revenue Estimates**: FY26 revenue estimates for CLS's Enterprise segment have been increased from $2,752 million to $3,782 million, with an overall price target raised to $359 [5][16] - **Growth Projections**: Revenue growth projected at a CAGR of 30.3% from 2024 to 2027, with net income expected to reach $1,326 million by 2027 [21] Fabrinet (FN) - **Market Position**: FN is positioned as a second source for TPU, with revenue estimates for FY26 increased from $146 million to $243 million due to a larger total addressable market (TAM) [11][27] - **Revenue Growth**: Projected revenue growth at a CAGR of 23.5% from 2025 to 2028, with net income expected to reach $699 million by 2028 [27] Jabil (JBL) - **Test Equipment Growth**: JBL is expected to benefit from growth in the test equipment market for GPUs, with FY26 estimates for semi-cap equipment rising to $2.9 billion from $2.5 billion in FY25 [6][15] Flex Ltd (FLEX) - **Power Systems Exposure**: FLEX has significant exposure to power systems, with 25-30% of its $6.5 billion data center revenues in FY26 coming from these solutions [12][15] - **Market Position**: Expected to see upside in business throughout 2026, particularly in full rack manufacturing [5][15] Risks and Challenges - **Celestica (CLS)**: Risks include customer concentration, loss of programs to competition, and potential slowing of AI spending [18][68] - **Fabrinet (FN)**: Risks include a slowdown in AI spending, lower outsourcing activity, and increased competition [20][74] Valuation and Price Targets - **Celestica Inc. (CLS)**: Price target set at $359 based on a 32x FY27 EPS of $11.21, reflecting a positive mix shift and rising ODM/HPS content [17][67] - **Fabrinet (FN)**: Price target set at $499 based on a 30x FY27 EPS of $16.64, accounting for the AI investment cycle [19][73] Conclusion - The IT Hardware and Communications Equipment industry is experiencing growth driven by custom ASICs and AI-related investments, with specific companies like CLS and FN positioned to benefit significantly. However, potential risks related to market dynamics and competition remain a concern.

Core Insights - Earnings estimates for Celestica Inc. (CLS) for 2025 have increased by 33.2% to $5.90, and for 2026, they have risen by 41.8% to $8.21, indicating strong growth potential and a solid business model [1][5] Group 1: AI and Market Demand - The proliferation of AI applications and generative AI tools is creating significant growth opportunities for Celestica, driving demand for its data communications and information processing infrastructure products [3][5] - Celestica is expanding its product offerings through innovation and strategic collaborations, including the introduction of next-generation storage controllers and high-bandwidth switches to meet the demands of AI applications [4][6] Group 2: Product Diversification and Customer Base - The company's focus on product diversification and presence in high-value markets is enhancing its market position, supported by strong R&D capabilities [6][7] - Celestica's diverse customer base across multiple industries, including communication, healthcare, and aerospace, reduces dependence on any single sector, enhancing business resilience [7] Group 3: Financial Performance - Celestica's stock has increased by 270.3% over the past year, significantly outperforming the industry growth of 112.5% and peers like Flex Ltd. and Jabil Inc. [8] - The company has a trailing four-quarter average earnings surprise of 6.9%, indicating a strong performance history [12][13]

Core Insights - Celestica Inc. has launched the SD6300 ultra-dense storage expansion system to tackle data growth challenges in AI environments and data centers [1][4] - The SD6300 is recognized as the industry's highest density and most compact JBOD, designed to optimize data center space and reduce capital and operational expenditures [2][4] Product Features - The SD6300 is a 4U JBOD with SAS-4 uplink, featuring 108 dual-port LFF SAS drive bays and a compact footprint of 1125 mm, fitting into standard 1200 mm racks [2][4] - It supports up to four dedicated SAS-4 drive bays for solid-state drives, enhancing overall system read and write performance [4] Target Applications - The SD6300 is suitable for various data-intensive applications, including AI data ingest, archiving, data lakes, cold storage, object storage, big data, and analytics [3][4] - It is particularly relevant for sectors such as research, oil and gas exploration, government, healthcare, and financial services [3] Market Positioning - The introduction of the SD6300 addresses the exponential challenge of data growth, providing a high-performance foundation for data-intensive applications [4] - Celestica aims to maximize storage density and improve data center floor space utilization while ensuring greater data availability through high availability and redundant architecture [7]