Why This AI Infrastructure Player Remains a Well-Kept Market Secret

Celestica (NYSE: CLS) is emerging as a compelling hidden gem within the AI hardware ecosystem, attracting significant attention from institutional investors despite remaining under the radar for many mainstream investors. Over the past 12 months, the company has experienced $6.32 billion in institutional inflows, signaling growing confidence from major funds including Viking Global Investors, Divisadero Street, and Lazard, who substantially expanded their positions during Q3 2025.

The Business Momentum Behind the Rally

The fundamentals painting this opportunity are striking. Celestica specializes in designing and manufacturing mission-critical hardware for hyperscale data centers—encompassing high-performance Ethernet switches, custom AI compute systems, advanced thermal management solutions, and fully integrated rack-scale architectures.

Recent performance metrics underscore accelerating demand. Q3 2025 revenue climbed 28% year-over-year to $3.19 billion, while adjusted earnings per share surged 52% year-over-year to $1.58. Management subsequently raised full-year 2025 revenue guidance from $11.55 billion to $12.2 billion, with adjusted EPS revised upward from $5.50 to $5.90.

Looking ahead, the company has guided for $16 billion in 2026 revenue—representing 31% year-over-year expansion. This growth trajectory reflects management’s conviction in sustained demand visibility extending 12 to 15 months forward.

Market Dominance and Structural Tailwinds

Celestica’s competitive positioning remains formidable. The company commands over 50% market share in the Ethernet switches segment, a critical chokepoint as hyperscalers transition infrastructure from 400G to 800G switching technology. This upgrade cycle addresses fundamental requirements for higher bandwidth and reduced latency within large-scale AI clusters.

Beyond switching infrastructure, robust demand is materializing for application-specific integrated circuit (ASIC)-based compute systems. A major hyperscaler is currently ramping next-generation custom compute programs, indicating secular expansion in this category.

Multi-Year Revenue Visibility: The Underrated Catalyst

Perhaps most compelling is Celestica’s exceptional forward visibility. Confirmed purchase commitments span 12-15 months, providing management with unprecedented clarity for guidance and capital allocation. The company anticipates benefiting from a 1.6 trillion-unit networking infrastructure upgrade cycle at hyperscalers throughout 2027, alongside accelerating adoption of custom ASIC compute systems.

One particularly significant opportunity involves mass production commencement of rack-scale custom AI systems for a digital-native enterprise customer launching in 2027. Management has indicated this engagement alone could contribute “multiple billions of dollars” in incremental annual revenue by 2027.

The convergence of near-term demand strength, multiyear revenue visibility, and exposure to secular AI infrastructure trends positions Celestica as a compelling hidden gem for investors seeking exposure to the infrastructure layer supporting AI cluster expansion.