Celestica poised for growth as Google and OpenAI push data center demand

The AI boom gets described in terms of chips. Bernstein thinks the more interesting story is the plumbing that connects them. The research firm argues that a critical bottleneck inside data centers is opening up a large growth runway for networking stocks. It names Celestica as a prime example, with an Outperform rating and a $520 price target. What Celestica actually builds Celestica, which trades as CLS on both the NYSE and the TSX, is a Toronto-based electronics manufacturing services provider. The company supplies custom data center hardware to hyperscalers. That includes servers and Ethernet switches running at 400G, 800G and 1.6T speeds. Google has identified Celestica as a primary collaborator on its Tensor Processing Unit systems and upgraded networking. TPUs are Google’s in-house AI chips, its alternative to buying everything from outside vendors. The partnership comes as Celestica expands US manufacturing capacity, specifically in Texas. Its long-term projects are closely tied to Google’s AI buildout. OpenAI is the other name in the frame. Growing demand from OpenAI and its large-scale projects adds potential upside as Celestica ramps production on its 1.6T switch program...