Key Takeaways Celestica posted Q4 results with adjusted EPS and revenue beats, driven by 44% sales growth led by CCS.CLS saw CCS revenues rise 64% as Communications demand lifted HPS sales by 72% on hyperscale networking.Celestica raised 2026 outlook to ~$17B revenues, $8.75 non-GAAP earnings per share.Celestica, Inc. (CLS) recorded strong fourth-quarter 2025 results with adjusted earnings and revenues beating the respective Zacks Consensus Estimate.This Toronto-based electronics manufacturing service provi ...

Summary of Earnings Conference Call Insights Industry Overview - **Industry Focus**: US Enterprise Hardware and Networking - **Key Trends**: AI infrastructure investments are expected to drive earnings per share (EPS) beats for select companies, while traditional demand remains uneven. Strong performance is anticipated in AI-centric data centers, supported by robust financial results from vendors like Ciena and EMS providers such as Jabil and TD SYNNEX [2][4]. Company-Specific Insights Arista Networks (ANET) - **Performance Expectations**: Anticipated revenue for December quarter is $2.42 billion, approximately 3% above the estimate of $2.35 billion, reflecting a 25% year-over-year growth against a guide of 19% to 24% [10][11]. - **EPS Forecast**: Expected diluted EPS of ~$0.79, which is a 5% beat compared to the estimate of $0.75 [10][11]. - **Revenue Guidance**: Expected to raise the CY26 revenue guidance to 22% growth from the previous 20% due to strong AI investments and $2.5 billion in deferred revenue entering the December quarter [18][19]. - **Historical Performance**: Over the past five years, Arista has consistently exceeded revenue guidance by an average of 4% in the December quarter [7][13]. - **Operating Margins**: Expected operating margin of at least 48.3%, which is approximately 150 basis points above the estimate of 46.8% [11]. IBM - **Revenue Expectations**: Anticipated revenue of $19.2 billion for the December quarter, in line with consensus estimates [22][25]. - **Segment Performance**: Expected constant currency growth of ~9% in Software, ~2% in Consulting, and ~6% in Infrastructure [22][24]. - **EPS Forecast**: Expected adjusted EPS of $4.29, slightly below consensus of $4.30 [23][25]. - **Future Guidance**: Anticipated guidance for CY26 revenue growth of 5+%, including a contribution from the pending Confluent acquisition [39][42]. Celestica (CLS) - **Revenue Expectations**: Projected revenue of $3.61 billion for the December quarter, which is 3% to 4% above the guide, driven by strong demand for AI back-end 800G switches [49][54]. - **EPS Forecast**: Expected adjusted EPS of $1.86, approximately 7.5% above the midpoint of the company outlook [49][54]. - **Future Guidance**: Anticipated increase in CY26 revenue and EPS guidance to $16.5 billion and $8.70 respectively, reflecting strong demand in both HPS switching and TPU/Compute [62][63]. Extreme Networks (EXTM) - **Performance Expectations**: Continued strength in wired and wireless markets is expected to support upside in December quarter revenue and EPS estimates [68]. Lumentum - **Revenue Expectations**: Expected revenue to exceed estimates by at least 5%, driven by strong demand for laser chips and transceivers [4]. Key Takeaways - **AI Investment Impact**: Companies like Arista, Celestica, and Lumentum are well-positioned to benefit from AI infrastructure investments, with expectations of revenue and EPS beats [2][4]. - **Market Sentiment**: Investor expectations for Celestica and Lumentum are notably high, while Arista's expectations are more modest, indicating a preference for Arista based on its conservative outlook [2][4]. - **Guidance Trends**: Companies are expected to provide optimistic guidance for the upcoming quarters, reflecting confidence in sustained demand and operational efficiency [18][19][59]. Additional Insights - **Market Dynamics**: The anticipated price increases by customers may lead to a slight demand pull-in, impacting orders positively for companies like Extreme Networks [68]. - **Operational Efficiency**: Companies are maintaining tight control over operating expenses, which is expected to enhance margins despite potential revenue mix challenges [11][23].

Core Insights - Celestica, Inc. (CLS) is expected to report fourth-quarter 2025 earnings on January 28, with anticipated revenue growth driven by the Connectivity & Cloud Solutions segment due to strong demand in the communications market [2][10] Product Developments - During the quarter, Celestica launched the SD6300 ultra-dense storage expansion system to address the increasing AI data growth in both traditional and hyperscale data centers, optimizing space utilization within standard racks [3] - The company also introduced two new 1.6TbE data center switches, the DS6000 and DS6001, which are designed to support high-bandwidth AI/ML applications, effectively doubling the switching capacity of its current offerings [4] Market Performance - Celestica has gained significant traction in the rapidly growing AI data center market, with strong demand for its 800G switches among hyperscalers expected to drive growth in the communications sector, despite some weakness in the enterprise market [5] - The Zacks Consensus Estimate for CCS revenues is projected at $2.66 billion, up from $1.73 billion a year ago, while total revenue is expected to reach $3.45 billion, reflecting a year-over-year growth of 35.46% [6][10] Earnings Expectations - Net income for the quarter is projected at $218.5 million, with earnings per share estimated at $1.73, an increase from $1.11 in the same quarter last year [6]

Core Insights - Celestica, Inc. and Corning Incorporated are significant players in the global tech hardware ecosystem, with Corning focusing on advanced glass technologies and optical connectivity, while Celestica provides electronics manufacturing services and supply chain solutions [1][7] Market Overview - The global AI infrastructure market was valued at $35.42 billion in 2023 and is projected to reach $223.45 billion by 2030, growing at a compound annual growth rate of 30.4%, driven by the expansion of AI workloads [2] Celestica's Performance - Celestica's Connectivity & Cloud Solutions segment saw a 43% year-over-year revenue increase, driven by demand for advanced networking products like 400G and 800G switches, as well as enterprise-level data communications infrastructure [3][5] - The company is expanding its partnerships and launched the SC6110 storage controller, which is designed for AI infrastructure and high-performance computing [4] - Celestica's recent introduction of 1.6TbE data center switches indicates a focus on supporting high-bandwidth AI applications, which is expected to drive long-term growth [5] Corning's Performance - Corning is experiencing growth in its Optical Communications and Specialty Materials segments, benefiting from the increasing use of mobile and IoT devices and the demand for robust network architecture in AI data centers [7][8] - The company is innovating with advanced fiber and cable systems that enhance connectivity capacity in data centers without significant infrastructure changes [9] - Corning's consumer electronics segment is also a major growth driver, with collaborations with leading manufacturers and expansion into the automotive market [10] Competitive Landscape - Both companies face competition, with Corning competing against Amphenol Corporation in the communication components market, but its innovative product launches are expected to provide a competitive edge [12] - Celestica's revenue is significantly dependent on a few major customers, with 59% of its total revenues coming from three customers, posing a concentration risk [6][21] Financial Estimates - The Zacks Consensus Estimate for Celestica's 2025 sales and EPS indicates year-over-year growth of 26.31% and 52.06%, respectively, while Corning's sales are expected to grow by 12.99% with an EPS projected at $2.52 [13][15] - Over the past year, Celestica's stock has gained 205.3%, compared to Corning's 85.3% growth, but Corning appears more attractive from a valuation perspective with a lower price/earnings ratio [16] Investment Outlook - Celestica holds a Zacks Rank 3 (Hold), while Corning has a Zacks Rank 2 (Buy), indicating a more favorable investment outlook for Corning [17][22] - Both companies are expected to benefit from margin expansion in the AI infrastructure domain, but Corning's broader market exposure reduces its risk compared to Celestica's reliance on AI infrastructure investments [18][21][22]

Core Insights - Celestica, Inc. (CLS) reported an operating cash flow of $126.2 million for the third quarter, an increase from $122.8 million year-over-year, with total cash flow for the first nine months of 2025 reaching $408.9 million, up from $330.5 million in 2024 [2][9] - The company experienced a 43% increase in revenues from the Connectivity & Cable Solutions (CCS) segment, driven by demand for advanced networking products, particularly 400G and 800G switches, fueled by AI investments [3][9] - Celestica raised its free cash flow guidance for 2025 to $425 million, up from $400 million, supported by strong revenue growth and a stable cash cycle [5][9] Financial Performance - The inventory balance for Celestica was $2.05 billion, an increase of $226 million year-over-year and $129 million from the previous quarter, with cash cycle days improving to 68 days from 70 days in the second quarter of 2025 [4] - Free cash flow for the third quarter was $88.9 million, compared to $76.8 million in the same quarter last year, with capital expenditure at $37 million, representing 1.2% of revenues, below the expected range of 1.5-2% [5] Competitive Landscape - Competitors such as Sanmina Corporation reported a significant increase in cash flow, generating $199.1 million from operating activities in the fourth quarter of fiscal 2025, compared to $51.9 million the previous year, driven by growth in Communications Networks and Cloud Infrastructure [6] - Jabil, Inc. also showed strong performance with $323 million in net cash from operating activities in the first quarter of fiscal 2026, up from $312 million a year ago, and a free cash flow of $272 million compared to $226 million the previous year [7] Valuation and Estimates - Celestica's shares have increased by 223.5% over the past year, outperforming the industry growth of 105.1% [8] - The company trades at a forward price-to-earnings ratio of 36.51, significantly higher than the industry average of 24.37 [10] - Earnings estimates for 2025 have remained stable over the past 60 days, while estimates for 2026 have seen a decrease [11]

Core Insights - Celestica Inc. reported strong third-quarter 2025 results with adjusted earnings and revenues exceeding Zacks Consensus Estimates, driven by growth in the Connectivity & Cloud Solutions segment and management's focus on innovation and AI advancements [1][8] Financial Performance - Quarterly net income reached $267.8 million or $2.31 per share, a significant increase from $89.5 million or 75 cents per share in the same quarter last year, reflecting nearly threefold growth in GAAP earnings due to top-line improvement [2] - Non-GAAP net earnings rose to $183.1 million or $1.58 per share, up from $123.8 million or $1.04 per share year-over-year, beating the Zacks Consensus Estimate by 11 cents [2] Revenue Analysis - Total revenues for the quarter were $3.19 billion, marking a 27.8% year-over-year increase, driven by strong demand in the CCS segment, surpassing management's guidance and Zacks Consensus Estimate by $170 million [3][8] - CCS segment revenues improved by 43.2% year-over-year to $2.41 billion, accounting for 76% of total revenues, primarily due to robust demand in the Communications end market [4] - Revenues from the Enterprise end market declined by 23.9% year-over-year to $470.1 million, while Communications end market revenues surged by 82% to $1.94 billion, supported by hyperscale customer demand for networking products [5] Segment Performance - Advanced Technology Solutions segment revenues were $781 million, down 4.1%, contributing 24% to total revenues, with operating income increasing by 6.7% year-over-year to $42.8 million [6] Cash Flow & Liquidity - Operating cash flow for the quarter was $126.2 million, slightly up from $122.8 million in the previous year, with free cash flow at $88.9 million compared to $76.8 million year-over-year [7] - As of September 30, 2025, the company held $305.9 million in cash and cash equivalents against long-term debt of $756.7 million [7] Future Guidance - For Q4 2025, Celestica anticipates revenues between $3.325 billion and $3.575 billion, with non-GAAP earnings per share expected in the range of $1.65 to $1.81 [9] - Full-year revenue projection has been raised to approximately $12.2 billion, up from the previous estimate of $11.55 billion, with non-GAAP adjusted earnings expected to be $5.90 per share [10]

Core Insights - Celestica Inc. reported strong second-quarter 2025 results with adjusted earnings and revenues exceeding Zacks Consensus Estimates [1][8] - The growth was primarily driven by the Connectivity & Cloud Solutions (CCS) segment, supported by management's focus on innovation and AI advancements [1][8] - The company raised its full-year 2025 revenue, earnings, and free cash flow outlook based on solid Q2 performance [8][10] Financial Performance - Quarterly net income reached $211 million or $1.82 per share, a significant increase from $95 million or 80 cents per share in the same quarter last year [2] - Non-GAAP net earnings improved to $161.2 million or $1.39 per share, up from $108 million or 90 cents per share year-over-year, beating the Zacks Consensus Estimate by 15 cents [2] - Revenues for the quarter were $2.89 billion, reflecting a 21% year-over-year increase, surpassing management's guidance and Zacks Consensus Estimate by $223 million [3][8] Segment Performance - The CCS segment's revenues grew 28% year-over-year to $2.07 billion, driven by strong demand in the Communications end market, accounting for 71.6% of total revenues [4][5] - The Communications end market saw a 75% revenue increase to $1.64 billion, supported by demand for networking products [5] - The Advanced Technology Solutions (ATS) segment reported revenues of $819 million, a 7% increase, contributing 28.4% to total revenues [6] Cash Flow & Liquidity - Operating cash flow for the quarter was $152.4 million, up from $99.6 million in the prior year, with free cash flow at $119.9 million compared to $65.6 million last year [7] - As of June 30, 2025, the company had $313.8 million in cash and cash equivalents and long-term debt of $848.6 million [7] Guidance - For Q3 2025, Celestica expects revenues between $2.875 billion and $3.125 billion, with non-GAAP earnings per share projected in the range of $1.37 to $1.53 [9] - The full-year 2025 revenue forecast has been raised to approximately $11.55 billion, with non-GAAP adjusted earnings expected to be $5.50 per share [10]

Investment Rating - The report does not explicitly state an investment rating for the industry or specific companies within it Core Insights - Capital expenditure (Capex) for AI infrastructure is expected to remain strong, driven by tier-2 clouds and large enterprises diversifying their spending on data center equipment [2][3] - The transition to 800G networking is anticipated to dominate through 2026, with Ethernet potentially scaling up in networking opportunities [2][5] - Data center equipment spending is diversifying across more cloud players, with a forecasted growth rate of approximately 18% CAGR from 2024 to 2029, reaching around $925 billion [3] Summary by Sections Data Center Equipment Spending - Cloud Provider capex is projected to grow significantly, with more cloud players expected to spend over $5 billion annually, enhancing vendor customer base diversity [3] - Hyperscalers are likely to continue favoring best-of-breed networking providers, while tier-2 cloud providers will prefer full-stack solutions [3] Networking Trends - The transition to 800G is ongoing, with AI players at various stages, and the revenue recognition timeline for networking vendors has lengthened from 1-2 quarters to 2-4 quarters [5] - Vendor diversity for switching silicon is becoming increasingly important for AI workloads, with Cisco and Juniper expected to gain market share [5] Market Dynamics - The report highlights relative strength in Asia and Middle Eastern sovereign AI initiatives, indicating a robust market for data center equipment [3] - Concerns regarding data center switching market share, particularly for Arista, are viewed as somewhat exaggerated [2]

Core Industry Insights - The electronics manufacturing services (EMS) industry is highly competitive and rapidly evolving, driven by factors such as AI, data center expansion, consumer electronics growth, 5G adoption, IoT proliferation, and automotive innovation [4] - Both Celestica Inc. and Jabil Inc. are strategically positioned in this evolving EMS landscape, with domain-specific expertise in core areas [4] Jabil Inc. Highlights - Jabil is experiencing significant growth in AI-related revenues, projected to reach $8.5 billion by 2025, reflecting a 50% year-over-year growth [5] - The AI data center market is expected to grow from $15.02 billion in 2024 to $93.60 billion in 2032, with a compound annual growth rate of 26.8% [6] - Jabil plans to invest $500 million in the Southeast U.S. to expand manufacturing capabilities and workforce development for the cloud and AI data center infrastructure market [6] - The company generated $326 million in adjusted free cash flow in Q3 and anticipates over $1.2 billion in adjusted free cash flow for the full year 2025, indicating efficient working capital management [7] - Jabil faces challenges from weak demand in renewable energy and EV verticals, as well as competition from Celestica and others [8] Celestica Inc. Highlights - Celestica is witnessing growth in its Connectivity & Cloud Solutions (CCS) segment, driven by strong demand for 400G and 800G switches [9][10] - The company is focusing on product diversification and innovation, with strategic collaborations with industry leaders like AMD and Broadcom expected to yield long-term benefits [10] - Celestica's strong R&D capabilities allow it to produce high-volume electronic products and complex technology infrastructure products [11] - The introduction of innovative products, such as the ES1500 enterprise access switch, positions Celestica for long-term growth [12] - However, the company faces margin pressures due to intensifying competition and significant customer concentration risk [13] Financial Performance and Valuation - Jabil's 2025 sales are estimated to grow by 0.58%, with EPS growth of 10.13%, while Celestica's sales and EPS are expected to grow by 13.15% and 30.15%, respectively [14][16] - Over the past year, Celestica's stock has gained 152.6%, while Jabil's has increased by 85.2% [17] - Jabil's shares trade at a forward P/E ratio of 20.42, which is lower than Celestica's 28.98, making Jabil more attractive from a valuation standpoint [17] Investment Outlook - Jabil holds a Zacks Rank 1 (Strong Buy), while Celestica has a Zacks Rank 3 (Hold), indicating a stronger investment outlook for Jabil [19][21] - Both companies are expected to benefit from the growing AI proliferation across industries, but Jabil's broader portfolio, robust cash flow, and strategic investments provide it with a competitive edge [21]

Core Insights - Celestica, Inc. (CLS) reported a 20% year-over-year revenue increase to $2.64 billion in Q1 2025, driven by strong performance in the Connectivity & Cloud Solutions segment [1] - The company anticipates a revenue of $10.91 billion in 2025, reflecting a 13.15% year-over-year growth, supported by demand in the AI-data center infrastructure market [3] Group 1: Company Performance - CLS experienced significant growth in its High Performance Solutions product lines, with revenues up 99% year-over-year, primarily due to strong sales of 400G and 800G switches [1] - The introduction of innovative products like the ES1500 enterprise access switch and the DS4100 800G switch is enhancing CLS's market position [2] - Celestica's stock has increased by 165.5% over the past year, outperforming the industry growth of 94.7% [7] Group 2: Competitive Landscape - Celestica faces competition from Sanmina Corporation and Jabil, Inc. in the electronics contract manufacturing services sector [4] - Sanmina reported $1.59 billion in revenues for Q2 2025, marking a 9.7% year-over-year growth, with a projected revenue of $8.1 billion for 2025 [5] - Jabil's Intelligent Infrastructure segment generated $3.4 billion in revenues, up 51% year-over-year, with an expected revenue of $29.05 billion for the current fiscal year [6] Group 3: Valuation and Estimates - Celestica's forward price-to-earnings ratio stands at 27.47, which is above the industry average [8] - The Zacks Consensus Estimate for Celestica's earnings for 2025 has remained unchanged over the past 60 days [9]