BMO Capital raises Celestica stock price target to $300 on OpenAI partnership

BMO Capital significantly raised its price target on Celestica (CLS) to $300 from $230, maintaining an Outperform rating, citing the company's anticipated substantial benefit from OpenAI's strategic partnership with Broadcom, which BMO believes is currently underestimated by consensus estimates. This upgrade follows Celestica's strong Q2 2025 sales of $2.89 billion, a 21% year-over-year increase, and coincides with other analyst upgrades and the introduction of new 1.6TbE data center switches, collectively underscoring Celestica's strengthening position in high-bandwidth AI and machine learning infrastructure.

Analysis

BMO Capital has significantly raised its price target for Celestica (CLS) to $300 from $230, maintaining an Outperform rating, driven by the anticipated substantial benefits from OpenAI's strategic partnership with Broadcom (AVGO). BMO specifically highlights Celestica as a "key beneficiary of OpenAI’s AVGO-based spend," suggesting this potential revenue growth is not adequately reflected in current consensus estimates, particularly for fiscal year 2027.

This upgrade follows Celestica's robust Q2 2025 financial performance, with sales reaching $2.89 billion, marking a 21% year-over-year growth. Other analysts, including Stifel and RBC Capital, have also increased their price targets, citing strong demand from hyperscalers, while Aletheia Capital initiated coverage with a $350 target, emphasizing Celestica's role in Google’s TPU modules and future OpenAI plans.

Celestica is further solidifying its market position through product innovation, having introduced two new 1.6TbE data center switches, the DS6000 and DS6001. These switches, designed for high-bandwidth AI and machine learning applications and based on Broadcom’s Tomahawk 6 chipset, effectively double the company’s existing capacity, underscoring its critical role in advanced AI infrastructure.

Despite an impressive 313% return over the past year and InvestingPro indicating the stock trades above its Fair Value, BMO Capital justifies a premium multiple based on Celestica’s strong customer exposure and market position. The appointment of Chris Colpitts to the Board also signals a focus on strengthening technology leadership.

Key Decisions for Investors

• Investors should evaluate Celestica's long-term growth potential given its strategic positioning in the high-growth AI infrastructure market and strong analyst conviction regarding the OpenAI-Broadcom partnership.
• Monitor future earnings reports for specific revenue contributions and guidance related to AI and hyperscaler demand, particularly for fiscal year 2027, as BMO suggests current estimates are conservative.
• Consider the current valuation, as the stock has seen significant appreciation and InvestingPro indicates it trades above fair value, balancing this against the strong fundamental catalysts and potential for further upside.