Celestica Just Unloaded Bad News

Celestica Inc. reported strong Q2 results for CY26, showing significant growth in AI networking switch revenues and improved gross margins. The company is strategically investing $1 billion in capex to meet hyperscaler demand, alongside a recent $3 billion equity offering, which, while dilutive short-term, aims to sustain high growth and margin expansion. The author maintains a 'Strong Bullish' rating on CLS, viewing the current valuation and recent pullback as a compelling buying opportunity.

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Uttam Dey

7.23K Followers

Summary

Celestica Inc. delivered a strong Q2 CY26, with accelerating AI networking switch revenues and significant gross margin expansion.
CLS is capitalizing on hyperscaler demand by investing $1B in capex, securing raw materials to support unprecedented growth and margin resilience.
The recent $3B equity offering, while dilutive short-term (~8.4–10%), strategically funds capex and positions CLS for sustained high growth and margin expansion.
I maintain a Strong Bullish rating on CLS, viewing current valuation (PEG 0.6) and pullback as compelling buying opportunities.

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Investment Thesis

Celestica Inc.’s (CLS) Q2 CY26 ER was a strong report that showed significant acceleration in the company’s AI networking-based switching revenues while gross margins meaningfully expanded as well.

The company’s hyperscaler customers are

This article was written by

Uttam Dey

7.23K Followers

Uttam is a growth-oriented investment analyst whose equity research primarily focuses on the technology sector. Semiconductors, Artificial Intelligence and Cloud software are some of the key sectors that are regularly researched and published by him. His research also focuses on other areas such as MedTech, Defense Tech, and Renewable Energy. In addition, Uttam also authors The Pragmatic Optimist Newsletter along with his wife, Amrita Roy, who is also an author on the newsletter as well as on this platform. Their newsletter gets regularly cited by leading publications such as the Wall Street Journal, Forbes, etc. Prior to publishing his research, Uttam worked in Silicon Valley, leading teams for some of the largest technology firms in the world, including Apple and Google.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of CLS either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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