Celestica, Inc.CLS is witnessing solid momentum in its Communications and Cloud Solutions (CCS) segment, backed by strength in AI networking and AI compute demand. Growing investments in AI infrastructure are driving expansion of Celestica's AI compute business. Management expects AI-related demand to remain a significant contributor to growth in the coming quarter. For the third quarter, the company expects enterprise revenues to increase approximately 190% year over year, driven by the increase in hyperscaler AI/ML compute programs.
AI is strengthening the 2026 and 2027 growth outlook. The company has raised its 2026 revenue forecast to $20.5 billion from $19 billion, representing approximately 65% growth. Beyond AI compute, Celestica is also expanding its role in AI infrastructure through custom rack systems. The company will manufacture advanced AI racks developed in collaboration with Broadcom to support OpenAI's custom accelerator roadmap. Initial deliveries are expected later in 2026, with mass production scheduled for 2027.
AMD is expanding its AI infrastructure portfolio with the upcoming Helios platform to strengthen its position in the hyperscale AI market. Celestica is a key manufacturing and design partner in this initiative. The OpenAI and AMD collaboration brings a multibillion-dollar opportunity for CLS in the next several years.
Celestica continues to see strong demand for 800G Ethernet switches across hyperscaler customers. Management expects 800G shipments to keep growing in 2027 alongside the acceleration of 1.6T deployments. AI/ML compute and networking business will likely continue to propel revenues in upcoming quarters.
How Are Competitors Faring?
Celestica faces competition from Jabil, Inc.JBL and Flex LTD.FLEX in the AI infrastructure space. Jabil boasts a comprehensive portfolio spanning computing, storage, networking, optics, power and cooling. Such an end-to-end product offering allows it to compete across several layers of the AI infrastructure buildout. Such broad exposure is translating into significant revenue growth. Jabil is expecting AI-related revenues of approximately $13.6 billion in fiscal 2026, up from $9 billion a year earlier.
Flex continues to deepen its exposure to AI infrastructure by combining compute integration, cooling and power capabilities. In first-quarter fiscal 2027, CPI (Cloud and Power Infrastructure) segment revenues rose 35% to $2.2 billion, backed by growing AI-related demand. Flex is developing high-density power solutions and cooling technologies for next-generation AI systems.
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