Celestica: 3 Key Takeaways for Long-Term Investors
In its third-quarter 2026 financial results and investor day call, held on Oct. 27, 2026, Celestica (CLS +0.43%) announced that full-year 2027 revenue is projected to reach $40 billion behind accelerating demand for artificial intelligence infrastructure. The enterprise hardware manufacturer is rapidly expanding production capacity and working capital investments to meet multiyear commitments from major technology customers. Three key takeaways from the presentation outline how the company is positioning itself for sustained growth.
1. Next-Generation 1.6T Networking Programs Will Overtake 800G Volume
Demand for high-speed network switches in data centers is shifting rapidly toward faster transmission speeds. Management projects 1.6T (terabit per second) networking equipment will generate more revenue than 800G units in 2027 as hyperscale cloud providers upgrade their infrastructure.
Looking into 2027, we expect 800G to continue its very strong growth trajectory and 1.6T volumes to accelerate substantially across a broadening base of customers and programs, including a number of variants supporting scale-up.
— Steven Dorwart, President of our Connectivity and Cloud Solutions segment
2. Custom AI Chip Platforms Are Becoming a Major Revenue Driver
Tech leaders are moving beyond off-the-shelf graphics processors toward application-specific integrated circuits (ASICs), custom microchips engineered for specialized artificial intelligence workloads. Celestica is building hardware for major custom chip programs, including Google’s tensor processing unit (TPU) platform and OpenAI’s Jalapeño architecture.
We continue to anticipate exceptional growth in custom ASIC compute programs in 2027, driven by our multi-generational relationship with Google in support of their TPU platform and our production ramp with OpenAI’s Jalapeño platform.
— Steven Dorwart, President of our Connectivity and Cloud Solutions segment
3. Capital Investments Are Accelerating to Support $40 Billion in Revenue
To support $20 billion of expected top-line growth in 2027, the company plans capital expenditures (spending on physical assets and manufacturing facilities) of $1.5 billion to $2 billion. Management is deploying working capital and expanding facilities in Texas, Thailand, and Mexico to handle massive product rollouts.
Additionally, with our 2027 outlook calling for nearly $20 billion of incremental revenue, we are investing meaningfully in working capital to support these large-scale ramps.
— Todd Ankenmann, Chief Financial Officer
Looking Ahead
Data center capacity constraints are extending customer commitments further into the future, creating multiyear visibility for hardware providers. Customers are engaging in long-term capacity planning to secure necessary manufacturing space and power availability.
High demand for AI compute capacity has seen it become heavily constrained by power and hardware availability. Because of this, hyperscaler customers are undertaking longer-term commitments and engaging with providers like Celestica in multi-year planning cycles to secure the necessary components and manufacturing capacity.
— Mandeep Chawla, Group President of Global Markets
Structural advantages in joint design, automated assembly, and liquid cooling position the business to capture long-term market share. Management is watching working capital efficiency, supply chain lead times, and factory utilization as capacity expands globally.
Celestica finds itself at the threshold of a truly remarkable opportunity and what I believe is the most exciting period for our company and our entire industry during my tenure as CEO.
— Rob Mionis, Chair of the Board and Chief Executive Officer
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The Motley Fool has positions in and recommends Celestica. The Motley Fool has a disclosure policy.
Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.