That Canadian Tech Stock up 689% in 2 Years-Is it Still a Buy?

2026-02-19 15:30:00 ET

Shares of Celestica ( TSX:CLS ) have cooled down a bit so far this year, now off around 3% year to date, but zooming out, the name remains one of the hottest artificial intelligence (AI) stocks in Canada. In the past two years alone, CLS stock has gained more than 689%, at least as of this writing. Undoubtedly, it’s one of the biggest and boldest beneficiaries of AI, especially since much of the earlier gains have been concentrated in the firms behind the AI data centre buildout.

Indeed, Celestica’s equipment is much-needed for AI infratructure and as demand for AI inference continues to rocket higher, this Canadian AI winner could continue marching higher. Of course, the business of electrical equipment can be quite cyclical, and if there is an AI bubble (I’m not sure there is one anymore, given the pace of innovation we’ve seen from the likes of frontier model makers), a peak cycle could mean amplified downside.

Celestica’s choppiness might be an opportunity

Given more recent volatility in the shares, perhaps there’s good reason to stay cautious as an investor. That said, if you have a strong stomach and desire a growth boost, CLS stock may still be a relatively decent pick for the more speculative part of your portfolio (preferably outside of your Tax-Free Savings Account, or TFSA , or Registered Retirement Savings Plan, or RRSP ). If you can salvage capital losses to offset gains elsewhere in your non-registered accounts, CLS stock certainly does stand out, especially as its valuation comes in a bit as investors digest the past years’ gains.

The stock trades at 40.1 times trailing price to earnings (P/E) after Wednesday’s 2.2% surge. But the big question, in my opinion, is what’s to be done about AI bottlenecks holding back AI infrastructure.

Could past successes make it tougher to gain from here?

At the same time, buying performance might beget even more performance if AI isn’t in a bubble and Celestica’s equipment stays in higher demand for longer. Indeed, it’s hard to tell, especially as management raises its guidance further. Growth seems to be off the charts, and the big question is whether this is a longer-lasting inflection point. The firm is also betting big to expand its capacity, which could make the most of this ongoing AI boom.

Add the potential margin gains into the equation, and I think the stock is not as pricey as it looks on the surface. There are real earnings to be had here, and that’s part of the reason why CLS looks cheaper when you look a year into the future (32 times forward P/E is reasonable for the growth roadmap, at least in my view). Beyond next year, shares might prove even cheaper if AI demand accelerates further.

In short, all signs point to the premium price tag being worth paying for CLS. But, at the same time, nobody knows when the AI infrastructure spending peak will be. Personally, I think the high risk might be worth taking for some, in exchange for a shot at higher rewards.

Bottom line

The stock might be up over 700% in two years, a magnitude of gain that will be nearly impossible to repeat in the next two years. Either way, the $45 billion firm is one of Canada’s AI darlings, and it might not be at the peak quite yet. Of course, I could be wrong, so do analyze the name further instead of buying into an analyst’s bull target on the stock!

DO you want premier growth? Well, you’ll have to pay a premium price and take on more risk than you would with a risk-off play. At the end of the day, it comes down to your suitability.

The post That Canadian Tech Stock up 689% in 2 Years—Is it Still a Buy? appeared first on The Motley Fool Canada .

Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends Celestica. The Motley Fool has a disclosure policy .

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