Celestica raises 2026 revenue target to $20.5 billion on AI demand

The massive scale of hyperscaler capital expenditure is fundamentally re-rating the electronics manufacturing sector from simple assembly to critical engineering partnerships. As data centers migrate toward 800G and 1.6T networking, the complexity of these builds creates high barriers to entry that favor established EMS providers like Celestica and Jabil. This shift implies that hardware availability, rather than software development, may become the primary bottleneck for the streaming and cloud ecosystem's next expansion phase. Watch for continued margin expansion in the Connectivity & Cloud segments of these firms as they transition to higher-value integrated technology solutions.

The upward revisions from EMS providers align with broader shifts in capital expenditure among the largest technology firms. Per Gartner in July 2026, global information technology spending is now projected to reach $6.37 trillion for the year, a 14.2% increase from 2025. This growth is heavily concentrated in AI-optimized servers, a subsegment Gartner expects to triple over the next five years. Hyperscalers such as Alphabet and Microsoft have specifically cited undercapacity as a primary driver for their increased spending, with Alphabet recently raising its 2026 capex target to a range of $195 billion to $205 billion to address infrastructure constraints. Sector performance has also been bolstered by strategic M&A and niche infrastructure expansion. Sanmina’s July 2026 earnings report highlighted how its purchase of ZT Systems transformed it into a Tier-1 provider for accelerated compute and rack-level integration. Similarly, Plexus has reported share gains in semiconductor capital equipment and a new partnership for data center battery energy storage systems, addressing the critical power stability requirements of AI hubs. According to reporting from Seeking Alpha in August 2026, these companies are no longer viewed as cyclical contract manufacturers but as core infrastructure platforms, with several trading at record forward P/E multiples despite rising inventory and working capital needs.