Celestica’s new SD6300 AI storage expands HPS footprint but leaves valuation and concentration risks intact

What happened

Celestica has introduced the SD6300, an ultra-dense storage system designed to address rapidly growing AI data needs by improving performance and cost efficiency. This launch extends the company’s AI infrastructure portfolio beyond compute and networking and builds on strong High-Performance Solutions momentum, which delivered roughly $1.2 billion of revenue (about 43% of total) in Q2 2025 amid robust hyperscaler AI capex. By adding storage to its portfolio, Celestica can potentially increase content per rack and deepen strategic relationships with cloud and AI customers, aligning with its strategy to move up the value chain within CCS. The company’s healthy profitability (9.4% GAAP operating margin in Q2 2025) and solid liquidity position provide room to fund such product expansions within its disciplined 1.5%–2.0% capex-to-revenue framework. That said, the shares already trade at a substantial premium (~53x TTM P/E versus EMS peers around 28x) and customer concentration remains high, so this product news primarily reinforces the existing AI growth narrative rather than fundamentally altering the risk-reward balance.

Implication

For shareholders, the SD6300 storage launch modestly strengthens the case that Celestica can sustain and broaden its AI-related revenue streams by capturing more of the data center stack. Over time, successful adoption could support a richer HPS mix and slightly better margins, but the near-term financial impact is likely small relative to the company’s nearly $2.9 billion quarterly revenue base. The move adds some product diversification within AI infrastructure, yet it leaves core structural issues—especially heavy customer concentration and CCS pricing pressure—largely unaddressed. Given the stock’s elevated valuation versus EMS peers, upside still hinges on continued AI order strength and clear evidence that new offerings like SD6300 translate into durable, high-margin programs rather than short-cycle ramps. Prospective buyers should look for either a more attractive entry point or more concrete indicators of diversified AI growth and storage design wins in upcoming quarters before re-rating the shares higher.

Thesis delta

Our stance remains HOLD/NEUTRAL: the SD6300 launch is incrementally encouraging for the durability and breadth of Celestica’s AI infrastructure opportunity but not thesis-changing. The new storage product slightly increases confidence that HPS growth can extend beyond networking and server platforms, which is positive for long-term positioning. However, without clearer visibility into customer uptake, volume, and margin contribution, the announcement does not materially mitigate elevated valuation or customer concentration risks, leaving the overall risk-reward profile broadly unchanged.