Amid persistent geopolitical tensions and trade uncertainties, the Canadian equity market has demonstrated remarkable resilience. The S&P/TSX Composite Index continues its upward trend, buoyed by low interest rates, steady consumer spending, enthusiasm for artificial intelligence (AI), and a rally in basic materials. While several Canadian stocks have posted impressive gains in this constructive backdrop, Celestica (TSX:CLS) stands out as a true market outperformer.
The company is a leading provider of data centre infrastructure and advanced technology solutions. As enterprises and cloud service providers aggressively expand their AI-related infrastructure, demand for Celestica’s specialized hardware and systems has surged significantly.
The core driver of Celestica’s powerful performance is its Connectivity & Cloud Solutions (CCS) segment. This division serves communications and enterprise customers, including the fast-growing server and storage markets. Its product portfolio spans high-performance networking switches, data centre interconnects, edge computing platforms, servers, storage systems, and routers. These technologies form the backbone of modern digital connectivity and are essential for handling the soaring volume and complexity of data-intensive workloads driven by AI and cloud computing.
Robust demand has directly translated into strong financial performance, powerfully supporting the stock price. Over the past year alone, Celestica shares have skyrocketed approximately 153%. The long-term performance is even more staggering: over the past five years, the stock has risen at a compound annual growth rate (CAGR) of more than 107%, representing a capital appreciation of roughly 3,728%.
Bolstered by strong demand in its core CCS segment, Celestica is well-positioned to sustain its growth momentum into 2026. CCS has become the primary engine of the business, contributing 76% of total revenue in Q3 2025. Growth within the communications end market was particularly explosive, with revenue soaring 82% year-over-year. This was fueled mainly by powerful demand for data centre networking equipment, specifically the acceleration of multiple 800G switch programs for Celestica’s largest hyperscale customers. Demand for optical programs also remained healthy.
Delving deeper into CCS, the performance of its Hardware Platform Solutions (HPS) business is especially notable. HPS generated $1.4 billion in revenue in the quarter, marking 79% growth and accounting for 44% of total company revenue. This acceleration was almost entirely driven by volume increases from next-generation 800G switching platforms.
Management expects this momentum to continue. Revenue in the communications end market is projected to grow at a high rate nearing 70%, reflecting sustained demand for data centre networking switches and ongoing ramps for multiple 800G programs. In the enterprise end market, the company anticipates a return to growth in Q4, with revenue expected to increase at a low rate around 20%. This rebound is projected to be led by the ramp-up of a next-generation hyperscale program focused on AI and machine learning compute applications.
Looking ahead to 2026, Celestica’s outlook remains solid, with the company forecasting strong double-digit growth in both revenue and profitability. Given that hyperscalers and enterprise customers are expected to continue heavy investment in AI and data centre infrastructure through 2027 and beyond, Celestica’s growth trajectory appears both durable and compelling.
