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Celestica (CLS) posted record Q3 2026 revenue of $5.83B, raised its 2026 outlook and set a $40B 2027 target, sending the AI infrastructure stock sharply higher.
- Q3 revenue rose 83% to a record $5.83B; adjusted EPS of $3.30 more than doubled.
- 2026 outlook rises to $21.0B revenue and $11.55 adjusted EPS.
- First 2027 outlook: $40.0B revenue and $21.50 adjusted EPS, above the $35.71B consensus.
Lead
Celestica (NYSE and TSX: CLS) surged between 10% and 13% in after-hours trading on October 26, 2026. The Toronto-based electronics manufacturer reported record third-quarter revenue of $5.83 billion, lifted its full-year earnings outlook and issued an initial 2027 revenue target of $40.0 billion. The results reinforced its position among the market's most closely watched AI stocks, as hyperscale cloud operators and frontier AI laboratories keep spending on data-center hardware.What Did Celestica Report for the Third Quarter?
Celestica reported revenue of $5.83 billion, up 83% from $3.19 billion a year earlier and ahead of the $5.47 billion consensus. Adjusted earnings per share reached $3.30, up 109% from $1.58 and above the $2.96 consensus. GAAP earnings per share were $3.26. Adjusted operating margin widened to 8.5% from 7.6%.
The Connectivity & Cloud Solutions segment drove the result. Its revenue rose 102% to $4.87 billion, with a margin of 8.9% against 8.3% a year earlier. Hardware platform solutions, the networking and compute systems sold into data centers, contributed about $2.3 billion, up 70%.
The Advanced Technology Solutions segment, which serves aerospace, defense, industrial and health technology customers, grew 23% to $0.96 billion. Its margin improved to 6.6% from 5.5%.
How Did Celestica Change Its Outlook?
Celestica raised its 2026 revenue outlook to $21.0 billion from $20.5 billion and its adjusted EPS outlook to $11.55 from $11.30. That implies growth of 69% in revenue and 91% in adjusted earnings per share for the year. The adjusted operating margin outlook is unchanged at 8.4%.
Free cash flow guidance moved the other way, falling to $460 million from $600 million. The company is investing in capacity and working capital to support the higher volumes.
For the fourth quarter, Celestica guided to revenue of $6.275 billion to $6.575 billion and adjusted EPS of $3.37 to $3.57. The midpoint implies an adjusted operating margin of 8.7%.
Why Did Celestica Shares Surge After Hours?
Shares jumped because the 2027 target came in well above expectations. The $40.0 billion revenue figure compares with a consensus of $35.71 billion. It implies roughly 90% growth from the 2026 outlook. The company also guided 2027 adjusted EPS to $21.50 and adjusted operating margin to 9.0%.
Management said customer demand forecasts for 2028 are "meaningfully higher" than for 2027. It described the demand environment as "very robust" and called the current period an AI infrastructure supercycle. The statement addressed the main question hanging over AI hardware names, which is whether spending persists beyond the next 12 months.
The beat on both revenue and earnings, together with the margin gains in each segment, supported the move. The 2027 figures carried more weight than the quarter itself.
What Does the $40 Billion 2027 Target Require?
Reaching $40.0 billion requires Celestica to nearly double its revenue in a year, after growing 69% in 2026. It also requires heavy investment. The company guided 2027 capital expenditures to $1.5 billion to $2.0 billion, a step up that matches the cut to 2026 free cash flow guidance.
The company has also strengthened its balance sheet. It completed a public offering with gross proceeds of $3.45 billion and plans to file a new normal course issuer bid. That program would allow repurchases of up to 2.5% of the public float.
The margin outlook is a second variable. A 9.0% adjusted operating margin in 2027 would be above the 8.4% expected for 2026, even as the revenue mix shifts further toward large-scale data-center programs. Customer concentration remains a feature of the business. A small number of hyperscale buyers account for much of the growth, so changes in their capital budgets flow directly into Celestica's order book.
Strategic Context
Celestica has shifted from a traditional contract electronics manufacturer to a supplier of networking switches, servers and storage systems for cloud and AI data centers. The Connectivity & Cloud Solutions segment now generates about 84% of total revenue. Demand from AI model training and inference deployments has pushed hyperscalers to commit capital years ahead. That gives suppliers such as Celestica more visibility than the sector has had in past cycles.
The company scheduled its 2026 Investor and Analyst Day for October 27 at 8:00 a.m. ET. The event is expected to detail the path to the 2027 targets and the 2028 demand picture.
Outlook
Celestica enters the fourth quarter with record revenue, a higher 2026 outlook and a 2027 target that exceeds consensus by about $4.3 billion. The next tests are the Investor Day detail, delivery against the fourth-quarter revenue range of $6.275 billion to $6.575 billion, and the pace of capital spending required to support a doubling of revenue. Share price reaction on Tuesday's open will show whether the after-hours gain holds.
Mentioned tickers: CLS
