Celestica, Inc. CLS generated revenues of $3.24 billion from Connectivity & Cloud Solutions segment in the first quarter of 2026, up 76% year over year. Within CCS (Connectivity & Cloud Solutions), segment margin improved to 8.6% from 8% in the first quarter of 2025, supported by favorable operating leverage and improved mix.
The growth was driven by solid traction across several verticals. Enterprise revenues within the CCS segment grew 101% year over year, backed by next-generation AI/ML compute program ramps, hyperscaler deployments and storage platform growth. In the CCS segment, revenues from the Communications increased 69% year over year. The growth is driven by 800G networking switch ramps, hyperscale networking demand and ongoing 400G program strength.
During the quarter, the company secured a co-packaged optics (CPO) Ethernet switch program with a hyperscaler customer. Celestica’s CPO program is strategically important as it is considered a critical component for next-generation AI networking infrastructure. The platform uses 1.6T switch silicon and advanced liquid cooling technology. CLS expects the production to ramp in 2027.
Celestica’s CCS segment has exposure across the AI data center ecosystem that includes AI servers, storage systems, 800G networking, 1.6T networking, optical interconnects, liquid cooling and cloud infrastructure. Per a report from Grand View Research, the global data center networking market is valued at $38.49 billion in 2024. The market is projected to witness a 17.2% compound annual growth rate from 2025 to 2033. This presents a solid growth opportunity for Celestica. Management is bullish about its revenue growth outlook.
How Are Competitors Faring?
Celestica faces competition from Jabil, Inc. JBL and Flex Ltd. FLEX in the Electronics Manufacturing Services industry. In the fiscal second quarter, Jabil’s Intelligent Infrastructure segment contributed 49% of total revenues, up 52% year over year. The healthy demand in the Capital Equipment, AI-related Cloud and Data Center Infrastructure verticals supported Jabil’s net sales.
Flex continues to deepen its exposure to the data center market through its Cloud and Power Infrastructure segment, which consolidated the company’s data center power and cloud activities. In the recent quarter, Flex’s Cloud and Power Infrastructure Segment, which includes the data center business, reported revenues of $1.8 billion, up 31% year over year.
Celestica's Price Performance, Valuation & Estimates
Celestica’s shares have soared 204.1% over the past year compared with the industry’s growth of 148.6%.
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From a valuation standpoint, Celestica trades at a forward price-to-earnings ratio of 28.92, higher than the industry average of 26.68.
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Earnings estimates for 2026 have increased 15.06% to $10.16 over the past 60 days, while the same for 2027 have also increased 15.78% to $14.6.
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Celestica currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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