Celestica Inc. saw its Toronto-listed shares decline approximately 5% on Tuesday as the TSX resumed trading following the Victoria Day holiday. The drop mirrored a 4.4% decline in its U.S.-listed shares on Monday, reflecting broader weakness in the artificial intelligence hardware supply chain.
As of early Tuesday afternoon, Celestica's U.S. shares (NYSE: CLS) were trading around $340.54, down 0.6% from the previous close, after fluctuating between $325.15 and $342.57 during the session. The stock had already fallen 6% on Friday and another 4.4% on Monday, when U.S. markets were open but Canadian markets were closed.
The pullback comes despite the company's upbeat outlook. In late April, Celestica raised its 2026 revenue and adjusted profit forecast, now projecting $19.0 billion in revenue and adjusted earnings per share of $10.15. The company reported first-quarter revenue of $4.05 billion, up 53% year-over-year, with adjusted EPS of $2.16.
Other contract manufacturers also faced headwinds. Jabil (JBL) fell about 2.3%, Flex (FLEX) slipped 2.4%, and Sanmina (SANM) lost 1.4% in U.S. trading. The broader tech sector, as tracked by the QQQ ETF, dipped 0.4%.
Celestica's stock has been viewed as a leveraged play on AI infrastructure, supplying servers, networking switches, and data center equipment. The recent sell-off suggests investors are questioning how much future growth is already priced into the stock, especially as the company benefits from hyperscaler spending on AI training and operations.
CEO Rob Mionis highlighted "accelerating growth" from the Connectivity & Cloud Solutions segment and "improved forecast visibility" when the company raised its targets. On May 13, Celestica also announced plans to expand its Fort Worth, Texas, facility to over one million square feet, adding about 1,700 new full-time jobs to meet "growing demand for US-based capabilities."
BMO Capital Markets maintained its Outperform rating on Celestica and raised its price target to $450 from $370 in late April, citing strong hyperscaler spending and Celestica's role in switching and Google TPU supply. However, the stock's recent price action suggests some investors are taking profits.
Canada's S&P/TSX Composite Index slipped 0.1% to 33,795.69, weighed by inflation concerns and rising bond yields. Celestica's decline stood out against the relatively flat broader market.
