Buy These 2 AI-Powered EMS Stocks With Double-Digit Short-Term Upside

The Electronics Manufacturing Services (EMS) industry, which has seen a 102.8% return over the past year, is poised for continued growth driven by AI demand, with Celestica (CLS) and Jabil (JBL) highlighted as key beneficiaries. Celestica is expanding its AI infrastructure presence, projecting 20.6% revenue growth and a 9.5% increase in 2025 EPS estimates over 30 days, capitalizing on the rapidly expanding AI infrastructure market. Jabil is investing $500 million to enhance its AI data center manufacturing capabilities, strengthening its position in the AI hardware supply chain. Both companies are rated as 'Strong Buy' or 'Buy' by Zacks and are positioned for double-digit short-term upside due to their strategic alignment with evolving AI demands.

Analysis

The Electronics Manufacturing Services (EMS) industry is demonstrating exceptional strength, evidenced by a 102.8% return over the past year and a top-tier industry rank, primarily fueled by escalating demand for AI infrastructure. Celestica (CLS) is capitalizing directly on this trend through its Connectivity & Cloud Solutions segment, particularly with the growing demand for 400G and 800G network switches. This is reflected in robust forward estimates, with consensus forecasts projecting 20.6% revenue growth and 43% EPS growth for 2025, supported by a 9.5% increase in EPS estimates over the last 30 days. In parallel, Jabil (JBL) is solidifying its position with a strategic $500 million investment to expand its AI data center manufacturing capabilities. Jabil's approach is notably risk-mitigated due to a strict product diversification policy, where no single product family exceeds 5% of operating income. While both companies show positive analyst revisions and double-digit upside potential, the risk profiles differ: Celestica's price target range implies a potential 33.8% downside, whereas Jabil's target range suggests no downside from its last closing price, indicating a more favorable risk-reward balance.

Key Decisions for Investors

• Given the powerful AI-driven tailwinds in the EMS sector, investors should consider exposure to companies like Celestica and Jabil that are directly benefiting from hyperscaler and enterprise AI investments.
• For Celestica, the aggressive growth outlook, with a projected 43% EPS increase for 2025, presents a compelling opportunity, but this must be weighed against the stock's higher volatility, as indicated by a wide analyst price target range.
• Jabil offers a potentially more resilient investment due to its disciplined product diversification and a $500 million strategic investment in AI hardware, with analyst price targets suggesting a stronger risk-reward profile with limited downside.
• Investors should monitor hyperscaler capital expenditure trends and demand for high-speed networking equipment as key leading indicators for the performance and earnings trajectory of both companies.