CLS shares surge 12% after Broadcom highlights strong AI networking switch demand, triggering a broader sector rally.
Shares of Celestica Inc. (CLS) jumped approximately 12% on Thursday, snapping a three-month slide and clocking its best single-day performance since November 2025. The rally was triggered by Broadcom’s Wednesday-night earnings call, which investors read as a clear signal that demand remains elevated for the high-speed switches and AI server racks Celestica manufactures for cloud customers.
Broadcom beat fiscal third-quarter estimates with $29.59 billion in sales and $3.32 in adjusted earnings per share. AI chip revenue reached $16.7 billion. During the call, management projected that custom accelerator and AI networking revenue would each triple year over year in the current quarter, lifting total AI semiconductor sales to $21.7 billion.
CEO Hock Tan noted that sales of the chips connecting AI servers grew more than 2.5 times from a year earlier. President Charlie Kawwas stated that Broadcom’s latest switch chip, Tomahawk 6, is now used by almost every major cloud company building AI clusters, including those purchasing their AI processors from other vendors. A faster, lower-latency version called Tomahawk Ultra began shipping this quarter. The next-generation chip, Tomahawk 7, which can move twice as much data, has finished design and is advancing toward production.
Tan also confirmed that OpenAI’s first custom AI chip, Jalapeño, shipped during the quarter. OpenAI plans to install approximately 1.3 gigawatts of these systems in 2027 and has outlined a path to exceed 5 gigawatts by 2028. Celestica is already building high-speed switches utilizing Tomahawk 6 for two large cloud customers and has committed to starting deliveries of its first OpenAI server racks later this year. The confirmation that these chips and switches are actively shipping directly supports Celestica’s existing backlog.
Broadcom’s results followed strong quarterly prints from two other server manufacturers. Dell reported record AI server orders of $60.9 billion alongside a $95 billion backlog, then raised its annual revenue forecast to $192 billion. Hewlett Packard Enterprise posted record quarterly revenue of $12.2 billion and lifted its outlook on AI servers and networking. Together, the three reports point to still-rising demand for data-center hardware, providing a structural tailwind for Celestica.
Despite the positive sector momentum, the Toronto electronics manufacturer had become one of the weaker AI-linked names following a $3.45 billion equity offering in early August, leaving shares down over the past three months. However, retail sentiment on Stocktwits improved from bearish to bullish over the last 24 hours, while message volume remained high.