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Celestica Inc. CLS-T +16.92%increase continued in the second quarter to benefit from surging demand from tech giants engaged in a global arms race to build giant artificial intelligence-driven data centres, surpassing heightened market expectations.

The Toronto-based global manufacturing giant reported Monday after the market close that it generated US$2.89-billion of revenue in the quarter ended June 30, up 21 per cent from the same period a year earlier. It also reported adjusted earnings of US$1.39 a share, up 54 per cent, and net earnings of US$1.82 a share, up 128 per cent.

Celestica’s U.S.-listed shares jumped more than 10 per cent in after-market trading Monday after the stock closed at an all-time high of $238.07 on the Toronto Stock Exchange. The stock has appreciated by nearly 80 per cent this year and is up more than 15-fold since the end of 2022, giving the company a market capitalization of nearly $27-billion. That makes Celestica the fourth-most valuable technology company on the Toronto Stock Exchange.

Celestica Inc Sv

238.07+105.41 (79.46%)

Year to date

Dec. 31, 2024

132.66

July 28, 2025

238.07

SOURCE: BARCHART

Celestica came into the quarter expected to not only beat its own increased projections from April, but also recent analyst forecasts after exceeding their estimates for revenue and adjusted earnings in each of the past four quarters. It did so.

Revenues were about $200-million above the upper end of the company’s forecast revenue and analyst estimates, while its adjusted operating margin of 7.4 per cent was 20 basis points above its forecast. The company also raised its guidance for 2025, forecasting revenue of US$11.55-billion (up US$700-million from its increased forecast in April) and adjusted earnings per share of US$5.50, up from its prior US$5 forecast.

Analysts had widely expected Celestica to increase its forecast after doing so last quarter,and three times in each of the past two years. In addition, rivals Accton Technology Corp., Broadcom Inc. AVGO-Q +1.72%increase and Jabil Inc. JBL-N +3.10%increase recently reported financial results above expectations,and AI chip giant Nvidia Corp. 

N/A recently surpassed US$4-trillion in stock market value.

Celestica, which supplies equipment to data centres and server farms that provide the computing power for AI models, has been on a tear since 2022, when OpenAI launched ChatGPT and kicked off the generative AI revolution.

CEO of Canada’s Celestica sells $130-million of shares, cashing in on Nvidia-style gains during AI boom

The Canadian company is a key supplier to tech giant “hyperscalers” including Google, Meta Platforms and Amazon.com Inc. They have heavily upgraded computing capacity for AI development and are accelerating plans to do so: Google said last week it would make US$85-billion of capital expenditures this year, US$10-billion higher than previously forecast. Revenue from the Celestica segment which supplies the AI boom, increased by 28 per cent in the quarter to US$2.07-billion, accounting for 71.6 per cent of total company revenues.

“Celestica is benefiting from AI-driven data center expansion through its storage and networking produces, as well as servers for AI applications,” RBC Capital Markets analyst Paul Treiber said in a note to clients last week.

Celestica provides computing modules, network switches and data storage capacity for server farms, none of which is a straightforward manufacturing job. It incorporates custom silicon and has proprietary thermal and power management designs to help companies manage the extreme heat and electricity needed to run data centres.

Celestica was briefly a stock market darling a quarter century ago, after the former IBM division was purchased by Onex Corp. ONEX-T -0.22%decrease and spun out into a public company as dot-com mania heated up. (Onex sold out of its position in 2023, before most of the stock’s current run). Its stock soared as the company supplied fibre-optic cables and other equipment used to build out the internet.

But Celestica shares crashed amid the dot-com bust and remained in investor purgatory for two decades.

Chief executive Rob Mionis arrived in 2015 after the company had experienced years of losses, job cuts and shareholder lawsuits. The American-born private equity and aerospace industry veteran shifted Celestica’s orientation, moving it away from manufacturing low-margin products and competing on price to building more complex equipment that required engineering expertise. It improved its mix of customer segments with higher margin products in aerospace and defence, renewable energy, electric vehicle chargers and medical devices.

But the company’s coup was landing a lead position servicing tech giants as they built out data centres. Those relationships, forged before ChatGPT’s arrival, put the company in position to take off with the arrival of the generative AI wave that is now rapidly transforming the global economy,Mr. Mionissaid in a 2023 interview.

Now, the company’s shares trade above its peers and at the high end of their 10-year range, and it is likely to maintain its premium valuation, Mr. Treiber wrote last week.

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Canadian National Railway Co. CNR-T +0.22%increase reported its net income inched up to $1.17-billion during its second quarter compared with last year, as it said the trade uncertainty is making it difficult for it to provide investors with an outlook. 

The Montreal-based company says revenue fell about 1 per cent, to $4.27-billion compared with $4.33-billion a year earlier. 

Diluted earnings per share for the quarter came in at $1.87, up from $1.75 a year earlier. 

CN lowered its 2025 forecast for adjusted diluted earnings per share growth, saying it now expects growth in the mid to high single-digit range. 

A previous estimate from CN expected adjusted diluted earnings per share to increase between 10 and 15 per cent for 2025.

CN says it is removing its 2024-26 financial outlook given continued uncertainty surrounding trade and tariff uncertainty. 

U.S. President Donald Trump announced a trade framework with Japan on Tuesday, placing a 15-per-cent tax on goods imported from that nation.

“This Deal will create Hundreds of Thousands of Jobs – There has never been anything like it,” Trump posted on Truth Social, adding that the United States “will continue to always have a great relationship with the Country of Japan.”

The President said Japan would invest “at my direction” US$550-billion into the U.S. and would “open” its economy to American autos and rice. The 15-per-cent tax on imported Japanese goods is a meaningful drop from the 25-per-cent rate that Trump, in a recent letter to Japanese Prime Minister Shigeru Ishiba, said would be levied starting Aug. 1.

With the announcement, Trump is seeking to tout his ability as a dealmaker – even as his tariffs when initially announced in early April led to a market panic and fears of slower growth that for the moment appear to have subsided. Key details remained unclear from his post, such as whether Japanese-built autos would face a higher 25-per-cent tariff that Trump imposed on the sector.

Tony Keller: Trump’s trade policy is completely nonsensical, and entirely clear

But the framework fits a growing pattern for Trump, who is eager to portray the tariffs as win for the U.S. His administration says the revenues will help reduce the budget deficit and more factories will relocate to America to avoid the import taxes and cause trade imbalances to disappear.

But the wave of tariffs continues to be a source of uncertainty about whether it could lead to higher prices for consumers and businesses if companies simply pass along the costs. The problem was seen sharply Tuesday after General Motors reported a 35-per-cent drop in its net income during the second quarter as it warned that tariffs would hit its business in the months ahead, causing its stock to tumble.

As the Aug. 1 deadline for the tariff rates in his letters to world leaders is approaching, Trump also announced a trade framework with the Philippines that would impose a tariff of 19 per cent on its goods while American-made products would face no import taxes. The president also reaffirmed his 19-per-cent tariffs on Indonesia.

The U.S. ran a US$69.4-billion trade imbalance on goods with Japan last year, according to the Census Bureau.

America had a trade imbalance of US$17.9-billion with Indonesia and an imbalance of US$4.9-billion with the Philippines. Both nations are less affluent than the U.S. and an imbalance means America imports more from those countries than it exports to them.

The countries that received Trump’s tariff letters – and where things stand now

The President is set to impose the broad tariffs listed in his recent letters to other world leaders on Aug. 1, raising questions of whether there will be any breakthrough in talks with the European Union. At a Tuesday dinner, Trump said the EU would be in Washington on Wednesday for trade talks.

“We have Europe coming in tomorrow, the next day,” Trump told guests.

The president earlier this month sent a letter threatening the 27 member states in the EU with 30-per-cent taxes on their goods to be imposed starting on Aug. 1.

The Trump administration has a separate negotiating period with China that is currently set to run through Aug. 12 as goods from that nation are taxed at an additional 30-per-cent baseline.

Treasury Secretary Scott Bessent said he would be in the Swedish capital of Stockholm next Monday and Tuesday to meet with his Chinese counterparts. Bessent said his goal is to shift the American economy away from consumption and to enable more consumer spending in the manufacturing-heavy Chinese economy.

“President Trump is remaking the U.S. into a manufacturing economy,” Bessent said on the Fox Business Network show “Mornings with Maria.” “If we could do that together, we do more manufacturing, they do more consumption. That would be a home run for the global economy.”

The income gap between the country’s highest and lowest income households reached a record high in the first quarter of 2025, Statistics Canada said Wednesday.

The agency said the difference in the share of disposable income between households in the top 40 per cent of the income distribution and the bottom 40 per cent grew to 49 percentage points in the first three months of the year.

“It’s not a surprise with the economic uncertainty we’ve been experiencing and the stress in the labour market. Unemployment is rising, and it’s really rising in particular for young people – young graduates coming out of school, they’re not finding their first job,” said Katherine Scott, a senior researcher focused on gender equality and public policy at the Canadian Centre for Policy Alternatives.

“This is all contributing to a lot of economic distress, and it is turning up in the data.”

Statistics Canada said the measure has increased each year after the onset of the COVID-19 pandemic.

For the first quarter of 2025, it said the increase came as the highest income households gained from investments, while the lowest income households saw wages decline.

Scott said many individuals at the higher end of the income scale didn’t see their incomes decline during the pandemic, with many staying in their jobs.

“But more importantly, they were in a position to take advantage of the huge run-up of the investment markets that happened at that time and have continued to increase ever since,” Scott said.

Those in the bottom 20 per cent of the income distribution saw the weakest growth in disposable income in the first quarter at 3.2 per cent compared with a year ago as their average wages edged down 0.7 per cent.

The lowest income households also saw the largest drop in net investment income as their investment earnings fell 35.3 per cent, while net transfers received, including increased government support measures, rose 31.2 per cent.

The average disposable income for those in the top 20 per cent of the income distribution increased at the fastest pace of any income group in the first quarter of 2025 as they benefited from a 7.7 per cent increase compared with a year earlier.

The highest income households saw a 4.7 per cent increase in average wages and a 7.4 per cent gain in investment income.

Statistics Canada said the wealth gap also increased as the top 20 per cent of the wealth distribution accounted for 64.7 per cent of Canada’s total net worth in the first quarter, averaging $3.3 million per household.

The bottom 40 per cent of the wealth distribution accounted for 3.3 per cent of net worth, averaging $85,700 per household.

Scott highlighted that following the 2008-09 recession, there was a “real discussion” regarding rising income inequality, which doesn’t appear to be taking place currently.

“This kind of information, the largest gap ever, it’s a wake-up call. We can’t sustain it, we have to pay attention to the structure of our economy and the distribution of that,” she said.

“We have to grow the pie, but we have to talk about the distribution of the pie. It matters that people are able to live a decent quality of life with dignity. I think that’s a really important public policy goal, which seems to be lost in the current conversation.”