This fund manager loves Celestica

Celestica (Celestica Stock Quote, Chart, News, Analysts, Financials NYSE:CLS) continues to benefit from powerful data centre tailwinds, according to Goodreid Investment Counsel VP Julien Nono-Womdim who discussed the name on BNN Bloomberg Market Call on Feb. 10.

“We’ve owned Celestica for a while now, done quite well on it,” Nono-Womdim said. “As we look at the company today, we think that the tailwinds continue.”

He pointed first to hyperscaler capital expenditures, noting Celestica’s revenues are “positively correlated with data centre CapEx,” which has been rising meaningfully in recent weeks. He also cited an industry upgrade cycle in network switch technology from 800 gigabits to 1.6 terabytes, which he believes will support both revenue growth and margin expansion.

In addition, Nono-Womdim said the shift from AI training workloads to inference — real-world usage applications — should provide another layer of demand.

“So while the valuation is sort of elevated from a P/E multiple standpoint, call it 30 times, we think the acceleration in revenues is gonna be overwhelmingly positive,” he said.

That said, he acknowledged that a pullback in hyperscaler spending would have direct implications.

“It certainly will, not a ‘could,’ it certainly will,” he said when asked whether a CapEx slowdown would affect Celestica.

At present, he said it is not a concern, but it remains a key risk factor his team is actively monitoring. Rather than waiting for formal announcements, Nono-Womdim said his firm tracks alternative data and industry backlogs to identify early signs of a slowdown.

“If there’s one thing we’re paying attention to, it’s that particular inflection, if and when AI spending resolves to the downside,” he said, adding that stocks tied to the AI buildout “are going to be punished quite severely” if spending turns.

Celestica shares have gained 136% over the past 12 months and 3,597% over five years. Of the analysts covering the stock, 20 rate it “Buy,” three “Hold,” and none “Sell,” with a consensus price target of US$382.78.

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