Celestica posts 83% revenue surge, targets $40bn in 2027

Celestica (NYSE/TSX: CLS) reported third-quarter 2026 revenue of $5.83 billion, an 83% year-on-year increase from $3.19 billion in Q3 2025, beating the top of its own guidance range of $5.25–5.55 billion. Adjusted EPS (non-GAAP) came in at $3.30, also above the guided ceiling of $3.08, and more than double the $1.58 reported in the same quarter a year earlier.

The company attributed the outperformance to stronger-than-anticipated demand from data centre customers and what it described as favourable operating leverage. Adjusted operating margin reached 8.5% for the quarter, up from 7.6% in Q3 2025 and what Celestica characterised as a new high for the business. On a GAAP basis, earnings per diluted share were $3.26.

Segment performance and capital raise

The Connectivity and Cloud Solutions (CCS) segment was the primary growth engine, delivering revenue of $4.87 billion, up 102% year on year, with segment margin improving to 8.9% from 8.3%. Within CCS, Hardware Platform Solutions, which encompasses server and networking equipment, contributed approximately $2.3 billion, a 70% increase on Q3 2025. The Advanced Technology Solutions (ATS) segment, covering aerospace, defence, industrial and health technology, grew a more modest 23% to $0.96 billion, with margin expanding to 6.6% from 5.5%.

Celestica also completed a public equity offering during the quarter, raising approximately $3.45 billion in gross proceeds. The company issued 11.1 million common shares on 7 August 2026, and total shares outstanding at quarter end stood at 126.1 million, up from 115.0 million a year earlier. The capital raise lifted the balance sheet cash position to $3.96 billion by 30 September, from $595.6 million at year-end 2025.

Management raised its full-year 2026 revenue outlook to $21.0 billion from a prior target of $20.5 billion, and increased its adjusted EPS guidance to $11.55 from $11.30. Free cash flow guidance was trimmed to $460 million from $600 million, with the company citing deliberate working capital investment to position for 2027 demand.

A $40bn target and the AI infrastructure supercycle

The more striking disclosure was an initial 2027 annual outlook. Celestica guided for revenue of $40.0 billion, implying 90% growth on the 2026 target, alongside an adjusted operating margin of 9.0% and adjusted EPS of $21.50. Capital expenditure for 2027 is forecast at $1.5–2.0 billion. Chair and chief executive Rob Mionis said customer demand forecasts for 2028 were "meaningfully higher" than the 2027 revenue outlook, signalling that the company does not expect the current cycle to peak next year.

Celestica sits in the contract electronics manufacturing and supply chain services segment, competing with the likes of Foxconn, Jabil, and Flex in broad terms, though its data centre infrastructure focus has differentiated it from more consumer-oriented rivals. The company positions itself as a strategic manufacturing partner for hyperscale cloud operators and what it terms "frontier AI labs," building high-bandwidth networking and AI compute hardware as well as rack-scale power and cooling systems.

The scale of the 2027 target will draw scrutiny from analysts who will want to understand customer concentration risk. A business doubling its revenue in consecutive years is heavily exposed to the capital expenditure cycles of a handful of hyperscaler clients. Any slowdown in data centre build-out, whether driven by shifts in AI model efficiency, power-grid constraints, or a recalibration of hyperscaler capex, would materially affect Celestica's forward numbers.

Export controls also represent a live variable. US Bureau of Industry and Security rules restricting the sale of advanced AI accelerators to certain jurisdictions affect the deployment timelines and geographic mix of Celestica's customers, with indirect consequences for manufacturing volumes. Celestica's own forward-looking disclosures cite evolving export controls and AI-related regulatory measures as risk factors, and any tightening in 2027 could disrupt the demand trajectory that underpins the $40 billion target. An Investor and Analyst Day is scheduled for 27 October 2026, where management is expected to provide programme-level detail behind the outlook.