Celestica sees 2027 sales nearly doubling to $40 billion

Celestica expects revenue to nearly double to $40 billion in 2027, a 90% increase from its outlook for this year, as major cloud and artificial intelligence customers ramp up demand for networking equipment and custom computing systems.

The Canadian technology company designs and manufactures hardware used in large data centers, including high-speed network switches and systems built around specialized AI processors. 

The forecast follows a strong third quarter. Celestica’s revenue jumped 83% from a year earlier to $5.83 billion, and adjusted earnings more than doubled to $3.30 per share, exceeding the company’s previous guidance. 

Celestica (CLS) also raised its 2026 revenue forecast to $21 billion from $20.5 billion in its third-quarter earnings announcement on Oct. 26.

Celestica shares jumped 12.62% to $277.76 in afternoon trading on Oct. 27.

Google and OpenAI programs fuel Celestica’s growth

Celestica’s Connectivity & Cloud Solutions business, which supplies data-center networking and computing equipment, generated $4.87 billion in third-quarter revenue, up 102% from a year earlier.

Revenue from its Compute & Storage business grew 242%, driven by higher volumes of AI computing systems and demand for storage products, according to the company’s quarterly filing.

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Google is one of the customers behind Celestica’s expansion plans.

Celestica is increasing its U.S. manufacturing capacity to support systems built around  Google’s Tensor Processing Units, or TPUs, specialized chips designed to handle AI tasks. The company, which describes itself as a preferred manufacturing partner for Google’s data-center hardware, expects its U.S. expansion to be completed in 2027.

Celestica is also preparing to ramp production of hardware systems built around OpenAI’s Jalapeño AI accelerator.

OpenAI designed the processor with help from Broadcom, which provides chip implementation and networking technology. Celestica contributes circuit board, server rack, and system engineering expertise to help bring the platform into large-scale production.

The companies announced the Jalapeño project in June, with plans to expand the custom AI computing platform over multiple generations.

Beyond custom AI systems, Celestica supplies networking equipment that connects large numbers of processors inside data centers.

Its 800-gigabit and 1.6-terabit Ethernet switches help move data between AI chips at high speeds. As cloud operators build larger AI clusters, they need faster connections to prevent data transfers from slowing down computing workloads.

Earlier this month, Celestica introduced the DS6005, a liquid-cooled network switch designed to support dense AI clusters and reduce power consumption.

At its Oct. 27 investor and Analyst Day, Celestica said customer demand forecasts for 2028 are already meaningfully higher than its $40 billion revenue outlook for 2027.

Management said those projections are based on programs Celestica has already won. However, the forecasts still depend on customer deployment schedules and do not represent guaranteed future revenue.

Meeting the expected demand will require Celestica to expand its manufacturing capacity before many of the planned AI systems are ready for delivery.

Celestica plans up to $2 billion to expand production

Celestica expects to spend $1.5 billion to $2 billion on capital investments in 2027, up from roughly $1 billion planned for 2026.

The company is adding production capacity at its U.S. facilities in Texas, upgrading operations in Mexico and expanding its manufacturing campus in Thailand.

Some of the investment will also go toward additional electrical capacity and automated production lines to assemble and test complex AI systems.

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Celestica must pay for much of that expansion before the new equipment generates revenue.

The company lowered its 2026 non-GAAP free-cash-flow forecast to $460 million from $600 million, citing additional working capital needed to prepare for next year’s growth.

Working capital includes money tied up in inventory and other operating needs. Celestica may need to buy components and increase production before customers pay for the completed hardware.

Management said during its Oct. 27 earnings call that it expects a net use of cash in 2027 as capital spending and working capital requirements increase.

Celestica has already raised additional funds to support its expansion. The company completed a $3.45 billion stock offering in August and ended September with approximately $4 billion in cash and cash equivalents.

The expansion also leaves Celestica exposed to changes in the plans of its largest customers. 

Its latest quarterly filing shows that one customer accounted for 35% of third-quarter revenue, while its 10 largest customers generated 85%.

If a major customer delays an AI project, changes its hardware requirements, or cuts planned spending, Celestica could be left with production capacity built for orders that arrive later than expected.

The next test will be whether Celestica can bring its new factories and production lines online fast enough to deliver the nearly $19 billion in additional annual revenue it expects in 2027.

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