We recently compiled a list of the 20 Trending AI Stocks on Latest News and Analyst Ratings. In this article, we are going to take a look at where Celestica Inc. (NYSE:CLS) stands against the other trending AI stocks.
The latest trends in AI stocks reflect optimism about the future of AI technology, with companies like NVIDIA continuing to dominate the space. The stock price of the chipmaker that is famous for selling AI GPUs has surged significantly in the past two years. After tripling in 2023, NVIDIA shares are up another 140% in 2024, pushing the market valuation of the firm close to $3 trillion. Analysts, like those at Bank of America, have increased their price target on the shares to around $1,500, citing the potential of NVIDIA to drive AI growth for years to come. Bank of America analysts believe the conversion of global data centers to AI-accelerated computing could require up to $500 billion annually, with NVIDIA playing a key role in this transformation.
Read more about these developments by accessing 30 Most Important AI Stocks According to BlackRock and AI News You Should Not Have Missed.
Prominent investment firms appreciate the significance of emerging AI trends. According to a report by Financial Times, investment titan Blackrock is exploring the launch of an AI-focused fund, in collaboration with tech powerhouse Microsoft and MGX, an investment firm based in Abu Dhabi. The primary aims of this fund are likely to include focus on creating data centers and funding energy infrastructure to support AI growth. NVIDIA is assisting Blackrock with estimating energy demands for new AI technologies. Analysts have forecast that energy constraints could be a potential roadblock to faster AI adoption. BlackRock will launch the fund with Global Infrastructure Partners, a firm it bought back in January for $12.5 billion.
The AI hype is truly global. Tech giant Amazon recently announced that it would invest £8 billion in the United Kingdom over the next five years as part of a major push to expand data center infrastructure across the country. Amazon rivals like Google and Microsoft have also previously announced plans to boost data center infrastructure in the UK. The former plans to invest $1 billion in the UK while the latter has confirmed around £2.5 billion to expand AI growth. Experts have stressed that AI is not just a short-term trend but a long-term transformative force. Francisco Bido, a top portfolio manager, recently underlined that AI was not a fad, noting the significant impact it had on both the top and bottom lines of many companies.
Read more about these developments by accessing 33 Most Important AI Companies You Should Pay Attention To and 20 Industrial Stocks Already Riding the AI Wave.
Our Methodology
For this article, we selected AI stocks based on the latest news and analyst ratings. These stocks are also popular among hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close-up of a circuit board with components depicting the intricate electronic componentry products the company produces.
Celestica Inc. (NYSE:CLS)
Number of Hedge Fund Holders: 38
Celestica Inc. (NYSE:CLS) offers a range of product manufacturing and related supply chain services. The company is involved in the manufacture and marketing of connectivity products for AI data centers, which include 400G and 800G switches, and storage solutions. In the second quarter earnings call, Rob Mionis, the CEO of Celestica Inc. (NYSE:CLS), noted that there was strong demand for the Hardware Platform Solutions marketed by the firm, comprising storage, compute, and networking products. This healthy demand, likely to increase in the coming months as hyperscalers invest in AI data centers, had helped the firm post a more than 50% year-to-year increase in connectivity revenues in the second quarter.
Stifel recently upgraded Celestica Inc. (NYSE:CLS) to Buy from Hold. In an investor note, the analysts from the advisory noted that the firm could achieve the FY25 EPS estimate of $4 despite an expected decline in server sales due to a technology transition at a top customer. The analysts added that the expected decline would be more than offset by growth in the communications segment of the firm, with the expected 800-G switch investment cycle. In the note, Stifel underlined that the selloff concerns were primarily due to worries of slowing AI investments from hyperscale customers after the earnings reports of key suppliers.
Overall CLS ranks 13th on our list of the trending AI stocks to buy. While we acknowledge the potential of CLS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CLS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.