Celestica named “Canada Best Idea” at TD Cowen

TD Cowen analyst John Shao says Celestica (Celestica Stock Quote, Chart, News, Analysts, Financials NYSE:CLS) remains a Canada Best Idea because AI infrastructure demand should prove more durable than investors expect.

In TD Cowen’s September Canada Best Ideas report, Shao maintained his “Buy” rating and US$430.00 target on Celestica.

“Long-term demand visibility remains the key investor debate,” Shao said.

The analyst said his updated framework suggests refresh-driven demand after 2030 could support about US$20-billion of annual revenue, roughly equal to his fiscal 2026 run-rate estimate.

Shao said the AI networking buildout is more likely the start of a recurring hardware refresh cycle than a one-time spending event.

As 400G and 800G Ethernet switches deployed from 2025 to 2029 age, he expects operators to upgrade to higher-bandwidth architectures to improve efficiency, throughput and total cost of ownership.

Based on Ethernet replacement activity alone, Shao estimates Celestica could support about US$20-billion of annual revenue beyond 2030, with additional upside from servers and storage.

He said a customer-driven model gives him more confidence in future demand, reflecting the concentration of AI infrastructure spending among hyperscalers and frontier model developers.

Shao said OpenAI and AMD could drive the next leg of growth beginning in fiscal 2027, alongside continued TPU demand as Google productizes its custom accelerators.

The analyst said Celestica should trade at a premium to electronics manufacturing services peers because of its sector-leading growth and margin profile.

Celestica trades at 22.4 times forward earnings, above EMS peers at 12.5 times and below data centre OEMs at 23.6 times.

“We believe our views help address concerns around future visibility, as we expect a significant portion of future demand to come from the more predictable refresh cycle, which the market appears to be underappreciating,” Shao said.

Shao expects Celestica to generate Adjusted EBITDA of US$1.91-billion on sales of US$20.90-billion in fiscal 2026, improving to Adjusted EBITDA of US$3.52-billion on sales of US$36.41-billion in fiscal 2027.

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