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

The Electronics Manufacturing Services (EMS) industry has demonstrated exceptional performance, returning over 100% in the past year, driven by robust demand and a strong outlook. Within this sector, Celestica Inc. (CLS) and Jabil Inc. (JBL) are highlighted as key players strategically positioned to benefit from the rapidly expanding AI infrastructure market. Celestica is capitalizing on hyperscaler networking and optical programs, projecting significant revenue and EPS growth through 2026, while Jabil is investing $500 million to expand its AI data center manufacturing, bolstered by strong capital equipment and cloud demand. Both companies are poised for continued growth, underpinning the critical role of EMS in the evolving AI hardware supply chain.

Analysis

The Electronics Manufacturing Services (EMS) industry is exhibiting exceptional market strength, evidenced by its position in the top 4% of the Zacks Industry Rank and a remarkable 102.8% return over the past year. This performance is largely propelled by secular growth in the artificial intelligence sector, a market projected to reach $223.45 billion by 2030 at a 30.4% CAGR. Within this space, Celestica (CLS) and Jabil (JBL) are identified as key beneficiaries. Celestica, rated a Zacks #1 Strong Buy, is capitalizing on strong demand in its Connectivity & Cloud Solutions segment, particularly for 800G and 400G network switches. This is reflected in robust forward estimates, with consensus forecasts pointing to 43% year-over-year EPS growth in 2025 and a further 21.5% in 2026, supported by recent upward earnings revisions. Jabil, a Zacks #2 Buy, leverages a diversified end-market strategy and a planned $500 million investment to expand its AI data center manufacturing capabilities. While its projected growth is more moderate, with fiscal 2026 EPS expected to increase 17.8%, its strategic diversification and a brokerage target range with no implied downside from its last closing price of $204.05 suggest a compelling risk-reward profile.

Key Decisions for Investors

• Given the EMS industry's significant outperformance and strong AI-driven tailwinds, investors should consider maintaining or initiating exposure to key players leveraged to data center and networking hardware.
• Celestica (CLS) presents a high-growth opportunity, backed by projected 43% EPS growth in 2025 and strength in high-demand 800G switches, making it suitable for investors with a higher risk tolerance for growth-focused positions.
• Jabil (JBL) offers a more resilient profile due to its end-market diversification and a $500 million investment in AI infrastructure, with an analyst price target range suggesting a favorable risk-reward ratio that may appeal to more risk-averse investors.
• Investors should monitor for any shifts in enterprise and hyperscaler capital expenditure plans, as the bullish outlook for both companies is heavily dependent on continued investment in the AI hardware ecosystem.