UBS Group AG upgraded its rating to "Buy"! The computing hardware company Celestica (CLS.US) has garnered a collective bullish sentiment from Wall Street, with a projected compound annual growth rate of 50% for EPS over the next two years.

Driven by the accelerating wave of global artificial intelligence infrastructure construction, computing power and data center hardware manufacturing giant Celestica (CLS.US) has recently once again become a focal point on Wall Street. As hyperscale clients rapidly upgrade their data centers to higher throughput architectures, major institutions have significantly raised their profit outlook for this critical water supplier. UBS Group AG analyst David Vogt, in the latest research report, has upgraded Celestica's stock rating from "Neutral" to "Buy" and raised the target price from $410 to $430. UBS Group AG pointed out that the demand for Ethernet switches and AI/ML computing hardware is surging. More crucially, Celestica's 1.6T rack-level solutions customized for leading AI giants like OpenAI are set to become the core engine driving the company's mid- to long-term revenue and profit growth. UBS Group AG conservatively forecasts that, with strong order support, the companys earnings per share (EPS) compound annual growth rate (CAGR) from calendar year 2026 to 2028 (CY26-CY28) could reach nearly 50%, with EPS expected to rise from $10.83 in CY26 to $24.72 in CY28. Intensive bullish sentiment from investment banks within a month In addition to UBS Group AG, several major Wall Street firms have recently issued research reports showcasing an overall pattern of "optimistic about long-term growth while closely monitoring short-term capital operations" for Celestica. According to PriceTargets data, among the 23 covering institutions, 20 have given a "Buy" rating, 1 a "Strong Buy," 2 "Hold," and none a "Sell"; the average target price is $438.86, with a highest prediction of $510 and a lowest of $300, and the consensus rating is "Buy." Morgan Stanley and Wolfe Research have maintained high target prices ($475 and $485), emphasizing that cloud vendors' capital expenditures on 800G and 1.6T network infrastructure have exceeded expectations, with Celestica as a key manufacturing partner directly benefiting from the industrys boom. Barclays analyst Tim Long has maintained an "Overweight" rating but slightly lowered the target price from $430 to $406 at the beginning of August. The firms believe this minor adjustment mainly reflects a rational assessment of the pace of the chip supply chain and the short-term industry expenditure digestion, which does not impact the fundamental logic. The core of the bullish consensus: Fulfillment of AI infrastructure orders The underlying logic of Wall Street's collective bullish stance is highly convergentthe multi-year explosion of capital expenditure in AI data centers is translating into substantial orders and profit upgrades for CLS: First, there is the ramp-up of high-speed network hardware. The demand for Ethernet switches from hyperscale cloud providers such as Meta and Amazon.com, Inc. remains strong, and CLS, as a key hardware OEM, directly benefits. Second, breakthroughs in AI-specific computing hardware. The 1.6T rack-level solutions supplied to OpenAI by the company are regarded as critical drivers for accelerated EPS growth beyond 2027. UBS Group AG forecasts a compound annual revenue growth rate of about 39% by 2029, with "still room for upside." Third, financial flexibility has been enhanced. TD Cowen noted that after recently completing equity financing, CLS has significantly strengthened its balance sheet to prepare for a challenging supply chain environment in fiscal year 2027, providing management with ample space to respond to potential disruptions and to compete effectively with well-funded Asian original design manufacturers (ODMs). Celestica completed a $3 billion common stock offering plan in early August for global capacity expansion. The underwriting teams, including Citigroup and TD Securities, believe that the offering has brought short-term equity dilution and stock price volatility, but the combination of self-funding and equity financing will position it to secure long-term orders from hyperscale clients in the coming years and accelerate the market's revaluation of its value from traditional EMS (Electronic Manufacturing Services) to a high-barrier "AI network and computing solutions provider."