CLS Q1 Revenues Surge 20% Year Over Year: What's Driving the Growth?

Celestica, Inc. CLS reported a substantial 20% top-line improvement year over year to $2.64 billion in the first quarter of 2025. The company witnessed solid growth in Connectivity & Cloud Solutions segment (“CCS”), driven by healthy demand in the Communications end market. Revenues from High Performance Solutions (“HPS”) product lines were up 99% year over year, backed by strong sales of 400G switches and growing traction for 800G switches from hyperscaler customers.

Growing investments in AI-native applications and generative-AI tools in various sectors are driving demand for Celestica’s data communications and information processing infrastructure products, such as routers, switches, data center interconnects and storage-related products. The company’s strength lies in its focus on innovation. It recently introduced ES1500, an advanced enterprise access switch designed to support modern IT infrastructure with complex and high-density IoT deployments. CLS’ DS4100, a 1U 800G per port top-of-rack, leaf/spine switch, is also gaining traction. The solution, powered by Broadcom’s TH4-12.8T switch chipset, effectively supports the high-bandwidth demands of data center networking.

Despite some macroeconomic uncertainties and growing geopolitical volatilities, Celestica expects strong revenue growth in 2025, driven by strength in AI-data center infrastructure market. Per the Zacks Consensus Estimate, the company expects to generate $10.91 billion in 2025, indicating 13.15% year-over-year growth.

How Are Competitors Faring?

Celestica faces stiff competition from Sanmina Corporation SANM and Jabil, Inc. JBL in the electronics contract manufacturing services industry.
 
In the second quarter of 2025, Sanmina’s Integrated Manufacturing Solutions generated $1.59 billion in revenues, registering 9.7% year-over-year growth. It has a strong presence across multiple end markets, including medical, defense, aerospace, communication, cloud infrastructure, automotive, industrial and energy. Such a diverse market presence strengthens its business resilience by mitigating risks associated with economic downturns in any single industry. Per the Zacks Consensus Estimate, Sanmina is expected to generate $8.1 billion in revenues in 2025, implying 7.02% year-over-year growth.

Jabil is also benefiting from solid growth in the Intelligent Infrastructure segment. The segment reported $3.4 billion in revenues in the May quarter, up 51% year over year. The uptrend is driven by healthy demand in the Capital Equipment, AI-related Cloud and Data Center Infrastructure verticals. Per the Zacks Consensus Estimate, Jabil expects to generate $29.05 billion in revenues in the current fiscal year, indicating 0.59% year-over-year growth.

Story Continues

Celestica's Price Performance, Valuation and Estimates

Celestica shares have gained 165.5% over the past year compared with the industry’s growth of 94.7%.

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From a valuation standpoint, Celestica trades at a forward price-to-earnings ratio of 27.47, up from the industry average.

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The Zacks Consensus Estimate for Celestica’s earnings for 2025 has remain unchanged in the past 60 days.

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Celestica currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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