Buy 2 Top-Ranked Beaten-Down AI-Led EMS Stocks Amid Solid Price Upside

Artificial intelligence (AI) infrastructure spending is reshaping the electronics manufacturing services (EMS) landscape as cloud providers and enterprises expand data center capacity. Demand for advanced networking, storage and compute platforms is creating new opportunities for manufacturers with deep engineering and production capabilities. 

The Zacks-defined Electronics - Manufacturing Services industry is currently in the top 3% of the Zacks Industry Rank. Since the industry is ranked in the top half of the Zacks Ranked Industries, we expect it to outperform the market over the next three to six months.

The EMS industry players provide design, engineering and manufacturing services to electronics original equipment manufacturers. Here we recommend two global EMS leaders, namely Celestica Inc. CLS and Jabil Inc. JBL for investment on the dip. 

These companies are strategically positioned in the EMS landscape and have the ability to cater to the evolving AI demands of business enterprises. Both stocks currently offer huge short-term price upside potential and sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows the price performance of our three picks in the past three months.

Image Source: Zacks Investment Research

Celestica Inc.

Celestica has been benefiting from massive AI infrastructure spending. AI infrastructure investment continues to underpin demand for enterprise networking, cloud infrastructure, storage systems and high-bandwidth switching products. Expansion of 400G, 800G and emerging 1.6T networking platforms should support future growth.

CLS is also broadening its technology portfolio through product innovation, manufacturing investments and engineering capabilities. The rapidly growing Connectivity & Cloud Solutions business remains the primary earnings engine for CLS as hyperscale customers continue expanding AI infrastructure.

Expansion of High-Value Tech Solutions

CLS continues investing in engineering expertise, advanced manufacturing capabilities and product innovation to strengthen its position in higher-value markets. Long-standing customer relationships also support participation in complex infrastructure programs that require scale and operational execution.

Celestica’s strategy increasingly centers on integrated technology solutions rather than traditional manufacturing alone. That approach positions CLS to pursue emerging opportunities across networking, storage and custom AI platforms while expanding margins over time.

Robust Outlook

For the third quarter of 2026, Celestica expects revenues between $5.25 billion and $5.55 billion. Adjusted earnings are projected in the range of $2.88 to $3.08 per share, while adjusted operating margin is expected to be 8.4% at the midpoint of the revenue and adjusted earnings guidance ranges.

Management also increased its 2026 outlook, citing stronger customer forecasts and improved component supply. The company expects revenues of $20.5 billion, up from its previous outlook of $19 billion, adjusted earnings of $11.30 per share versus the prior forecast of $10.15, adjusted operating margin of 8.4% compared with 8.1% previously, and free cash flow of $600 million versus the earlier expectation of $500 million. 

CLS also said it expects revenue growth in 2027 to accelerate beyond the approximately 65% growth anticipated for 2026, with adjusted earnings projected to grow faster than revenues.

Strong Estimates Revision

For 2026, the Zacks Consensus Estimate currently shows revenues of $19.05 billion, suggesting an improvement of 53.7% year over year and earnings per share of $10.21, indicating an increase of 68.8% year over year. The Zacks Consensus Estimate for the current year has improved 0.5% in the last 30 days.

For 2027, the Zacks Consensus Estimate currently shows revenues of $27.40 billion, suggesting an improvement of 43.8% year over year and earnings per share of $14.83, indicating an increase of 45.2% year over year. The Zacks Consensus Estimate for the current year has improved 1.6% in the last 30 days.

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Excellent Price Upside Potential

The stock is currently trading at a 30.7% discount to its 52-week high of $474.03 recorded on June 2. The short-term average price target of brokerage firms represents an increase of 36.9% from the last closing price of $328.43. The brokerage target price is currently in the range of $350-$510. This indicates a maximum upside of 55.3% and no downside. 

Jabil Inc. 

Jabil is gaining from sustained strength in AI infrastructure demand, which continues to support growth across its Intelligent Infrastructure business. This growth is being driven by strong customer demand, disciplined execution and capabilities spanning compute, storage, networking, optics, power, cooling and rack-level integration. 

JBL also secured its third hyperscale customer during the quarter, creating additional opportunities to expand customer relationships across the data center ecosystem. JBL is also benefiting from improving momentum across multiple end markets, supported by stronger-than-expected demand in automotive, renewables and Connected Living.

A Diversified Product Portfolio

Jabil's extensive manufacturing footprint and expertise position it as an ideal partner in the burgeoning AI/ML ecosystem. JBL’s commitment to providing unparalleled value to customers underscores its strategic importance in the optical module space. 

JBL’s photonics-based optical transceiver modules are designed to fuel the AI/ML revolution, promising unparalleled performance and scalability, thanks to the collaborative efforts of industry giants.

JBL’s diversified exposure to healthcare, automotive, industrial and connected living markets further supports stable long-term growth by reducing dependence on any single end market. Renewables also continued to improve, benefiting from safe harbor projects, AI and data center-related power demand, and a shift toward commercial projects. 

Impressive Outlook

For the fourth quarter of fiscal 2026, JBL projects revenues between $9.2 billion and $10 billion and core diluted earnings per share of $3.80-$4.20. The outlook reflects continued momentum in Intelligent Infrastructure, particularly AI-related programs, as well as improving trends in automotive and other end markets.

Jabil raised its fiscal 2026 outlook. The company now expects fiscal 2026 revenues of approximately $35 billion, core operating margin of about 5.8%, core diluted earnings per share of roughly $12.70 and adjusted free cash flow exceeding $1.4 billion. 

Management highlighted continued strength in AI infrastructure programs as a major growth catalyst. Jabil now expects AI-related revenue of approximately $13.6 billion in fiscal 2026, up from its prior forecast of $13.1 billion and significantly above the $9 billion generated in fiscal 2025.

Strong Estimates Revision

For fiscal 2026 (ending August 2026), the Zacks Consensus Estimate currently shows revenues of $34.97 billion, suggesting an improvement of 17.3% year over year and earnings per share of $12.74, indicating an increase of 30.7% year over year. The Zacks Consensus Estimate for the next year has improved 3.6% in the last 60 days.

For fiscal 2027 (ending August 2027), the Zacks Consensus Estimate currently shows revenues of $42.19 billion, suggesting an improvement of 20.7% year over year and earnings per share of $16.59, indicating an increase of 30.2% year over year. The Zacks Consensus Estimate for the next year has improved 15.6% in the last 60 days.

Image Source: Zacks Investment Research

Fabulous Price Upside Potential

The stock is currently trading at a 33.1% discount to its 52-week high of $428.93 recorded on June 17. The short-term average price target of brokerage firms represents an increase of 57.8% from the last closing price of $287.14. The brokerage target price is currently in the range of $426-$482. This indicates a maximum upside of 67.9% and no downside.

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This article originally published on Zacks Investment Research (zacks.com).

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