Can CLS Stock Maintain its 240% Growth Pace in 2025?

Celestica Inc. CLS has gained a phenomenal 241.8% over the past year compared with the electronics manufacturing services industry’s growth of 54.4%. It has also outperformed peers like Flex Ltd. FLEX and Jabil Inc. JBL over this period. With more than 25 years of experience in manufacturing backed by a simplified and optimized global network, Celestica is committed to delivering next-generation, cloud-optimized data storage and industry-leading networking solutions to help customers balance performance, power efficiency and space as technologies evolve. Buoyed by a diverse portfolio of products integral to AI (artificial intelligence) applications, CLS appears poised to replicate its stellar performance in 2025 as well.CLS Stock One-Year Price PerformanceImage Source: Zacks Investment ResearchCLS Buoyed by Portfolio TractionCelestia had benefited from the ongoing generative AI boom, thanks to the solid demand trends for AI/ML compute and networking products from hyperscale customers. In addition to the high-performance 800G family of network switches (which are vital for data centers that power AI applications) and storage solutions like the SC6100 controller and SD6200 platform (which provide efficient and scalable data storage for AI), Celestia offers Photonic Fabric – an optical compute and memory fabric solution capable of supercharging AI infrastructure. This solution provides a foundational technology to advance AI while maintaining scalable, sustainable and profitable business models.By integrating next-generation networking products with silicon photonics packaging solutions, Celestica aims to optimize supply chain solutions to reduce time to market. The data center switches combined with optical transceivers have the potential to handle and sustain high volumes of both inbound and outbound network traffic and cater to the demand for data center bandwidth for supporting AI/ML and data analytics applications. These state-of-the-art products have translated into solid top-line growth in recent years.DS4100 – the latest addition to its Hardware Platform Solutions portfolio, featuring a 1U 800G per port top-of-rack leaf/spine switch – has also garnered significant customer interest. The product caters to the high-bandwidth demands of data center networking across the enterprise, service provider and cloud provider domains. Designed with Broadcom Inc. AVGO TH4-12.8T switch chipset, it offers a comprehensive 800G data center switch lineup for demanding applications with the redundancy and flexibility required of modern data centers. Such state-of-the-art portfolio additions have helped the company to record healthy top-line growth over the past few years.Image Source: Zacks Investment ResearchEarnings Estimates Revision Trend for CLSEarnings estimates for Celestia for 2024 have moved up 33.2% to $3.85 over the past year, while the same for 2025 has jumped 32.6% to $4.43. The positive estimate revision depicts bullish sentiments for the stock. High Operating Expenses Dent CLS ProspectsDespite a healthy growth momentum, CLS remains plagued by margin woes. Celestica’s products are highly sophisticated and typically based on the latest technological innovations, which have historically led to high research and development costs. High operating expenses have contracted margins. This has dented CLS’ prospects to some extent.Image Source: Zacks Investment ResearchEnd NoteWith a diverse portfolio of products that form an integral part of AI applications, Celestica’s remarkable transformation in recent years offers a competitive edge across the broader technology market. The company is well poised for sustained growth over the years, backed by its robust infrastructure investments, solid technology know-how and wide industry experience.As the company scales up production volumes and costs go down, possible uses for silicon photonics are likely to soar across several industries, including automotive, data center and high-performance computing, telecommunications, medical, aerospace and defense. Moreover, with improving earnings estimates, the stock is witnessing a positive investor perception.However, with a Zacks Rank #3 (Hold), Celestica appears to be treading in the middle of the road, and new investors could be better off if they trade with caution. High operating expenses remain a potent headwind for the company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.1% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Jabil, Inc. (JBL): Free Stock Analysis Report Flex Ltd. (FLEX): Free Stock Analysis Report Celestica, Inc. (CLS): Free Stock Analysis Report Broadcom Inc. (AVGO): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks