Prediction: This Top Artificial Intelligence (AI) Stock Will Double in 3 Years
Harsh Chauhan, The Motley Fool
Sat, August 1, 2026 at 3:20 PM GMT+3 4 min read
Artificial intelligence (AI) stocks have taken a hammering lately, as investors have been rotating out of this sector due to multiple concerns, such as circular financing, competition from China, and the viability of the enormous sums being spent on AI data center infrastructure.
The Global X Artificial Intelligence & Technology ETF, an exchange-traded fund that invests in companies benefiting from the proliferation of AI by integrating this technology into their operations, along with companies selling AI-related hardware and software, has shed 8% of its value over the past month.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
However, AI hardware specialists continue to clock impressive growth, suggesting that the recent downturn in this sector may not be long-lasting. Celestica (NYSE: CLS) is the latest company to report solid results and raise its annual guidance, following impressive reports from companies such as ASML and Taiwan Semiconductor Manufacturing in July.
This contract electronics manufacturer, which counts Broadcom (NASDAQ: AVGO), Intel, and Advanced Micro Devices as its key customers, has seen its shares slide 12% over the past three months. However, this pullback is an opportunity for savvy investors to buy a top AI stock at a really attractive valuation. Let's look at the reasons why.
Celestica's revenue and earnings are increasing at a terrific pace
Celestica provides electronics manufacturing services (EMS) to various industries, such as data center and networking, aerospace and defense, healthcare, industrial, semiconductor manufacturing, and supply chain management. Its connectivity and cloud solutions (CCS) business has been experiencing outstanding growth lately, driven by robust demand for its networking switches deployed by the leading chip designers mentioned earlier.
This explains why Celestica's revenue increased by an impressive 62% year over year in Q2 to $4.7 billion. Even better, the company's earnings per share rose 83% year over year to $2.54. Celestica's guidance was the icing on the cake, with the company now expecting 2026 revenue to land at $20.5 billion, up from its prior guidance of $19 billion. It has also raised its non-GAAP earnings per share guidance to $11.30 from the earlier estimate of $10.15.
The updated guidance points toward a 65% jump in revenue from last year. Meanwhile, earnings per share are now expected to grow by 87%. More importantly, Celestica management noted in its earnings press release that its revenue growth rate will accelerate next year. Its adjusted earnings per share will continue to grow faster than revenue in 2027.
I won't be surprised to see Celestica's growth accelerating beyond next year, thanks to its partnerships with the likes of Broadcom, Intel, and AMD. Broadcom, for instance, reported a 143% year-over-year increase in its AI semiconductor revenue in the previous quarter to $10.8 billion. The company anticipates a 200% year-over-year increase in AI revenue in the current quarter to $16 billion.
What's more, Broadcom is confident of achieving more than $100 billion in AI revenue next year, indicating a significant improvement in the quarterly revenue growth rate of its AI business. Also, Broadcom has lucrative long-term agreements to deploy custom AI processors for major hyperscalers, which will be a tailwind for Celestica.
So, it is easy to see why analysts have become even more bullish regarding Celestica's bottom-line growth prospects over the next three years.
The stock's valuation and upside potential make it a no-brainer buy
The recent slide in Celestica's shares explains why it is trading at 36 times earnings, a small premium to the tech-laden Nasdaq-100 index's earnings multiple of 33. The stock should ideally trade at a larger premium, given the impressive earnings growth it is clocking and the sharp earnings jump Celestica could deliver through 2028.
Assuming Celestica's earnings reach $26.96 per share in 2028, and it trades in line with the Nasdaq-100 index's multiple of 33 at that time, its stock price could jump to $890. That's nearly 2.7x its current stock price, suggesting that investors should consider buying this tech stock before it starts soaring.
Should you buy stock in Celestica right now?
Before you buy stock in Celestica, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Celestica wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $394,601!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,197,093!*
Now, it's worth noting Stock Advisor's total average return is 895% — a market-crushing outperformance compared to 206% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of August 1, 2026.
Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Advanced Micro Devices, Broadcom, Celestica, and Intel. The Motley Fool has a disclosure policy.
Prediction: This Top Artificial Intelligence (AI) Stock Will Double in 3 Years was originally published by The Motley Fool
Yorumlar (0)
Giriş yaparak yorum yazabilirsin.
İlk yorumu sen yaz.