Is CLS Stock Still Worth Buying After Another Strong Earnings Beat?

Celestica Inc. CLS has rallied sharply as investors reward its accelerating exposure to artificial intelligence infrastructure. That raises a natural question of whether the stock still offers attractive upside after another quarter of better-than-expected results.

Answering that question requires balancing the company's operational momentum against its richer valuation, long-term growth prospects and the risks that accompany a rapidly expanding business.

CLS Earnings Continue Exceeding Expectations

Celestica again exceeded expectations in the second quarter of 2026. Adjusted earnings of $2.54 per share beat the consensus mark by 10.9% while revenues climbed 62.4% year over year to $4.70 billion, topping estimates by 8.1%. Record adjusted operating margin of 8.2% reflected stronger operating leverage and favorable business mix.

Management also raised full-year guidance. It now expects 2026 revenues of $20.5 billion, adjusted earnings of $11.30 per share, adjusted operating margin of 8.4% and free cash flow of $600 million, reinforcing confidence in continued execution.

Celestica's Valuation Deserves a Closer Look

Celestica's strong share-price performance has pushed its valuation above its historical norms and ahead of many industry and broader market benchmarks. Investors are now paying a premium for the company's AI-driven growth prospects and improving earnings profile.

Even so, the higher valuation may be justified if the company continues delivering rapid earnings growth, expanding margins and executing on its AI infrastructure opportunities. Future upside will likely depend more on sustained earnings growth than on additional multiple expansion.

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CLS Growth Drivers Remain Intact

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.

Celestica 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 as hyperscale customers continue expanding AI infrastructure.

Celestica's Risks Could Limit Upside

Competition remains intense across the electronics manufacturing services industry. Celestica competes with large global players, including Jabil JBL, Flex FLEX and Sanmina SANM, making continued investment in technology, manufacturing capabilities and customer relationships essential to maintaining market share.

International operations also expose the company to foreign exchange movements, geopolitical uncertainty and supply-chain disruptions. Macroeconomic weakness could weigh on portions of the Advanced Technology Solutions business despite stronger AI-related demand.

How CLS Rating Signals Fit the Investment Case

The investment case continues to benefit from favorable earnings estimate revisions alongside healthy operating momentum. Even after the stock's appreciation, the company appears positioned to participate in long-term AI infrastructure spending.

Celestica currently sports a Zacks Rank #1 (Strong Buy), a Growth Score of B and a VGM Score of B. Those indicators point to favorable growth characteristics and supportive estimate revisions. Its Value Score of D suggests much of the recent operational strength is already reflected in the share price, making continued execution important for sustaining investor enthusiasm. You can see the complete list of today’s Zacks #1 Rank stocks here.

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

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