The leading AI hyperscalers (basically the Mag7) just sold off hard, and some (but not all) of the leading AI “picks and shovels” stocks sold off with them. One name in particular stands out as increasingly attractive as I will briefly review from this week’s BH20 Growth Stocks report.
For starters, here is a look at the BH20 Fast-Paced Growth Stocks for the week. As you can see, a few popular names fell off the list this week (for example Nebius fell to #34 in the rankings (not shown), and quantum stocks D-Wave (QBTS) and IonQ (IONQ) fell to #49 and #63, respectively (also not shown), as they are building some powerful downward momentum).
*(click the image above for a “zoom-in-able” PDF version of the full document).
Bloom Energy (BE) and Iren (IREN) hold on to the top spots, however one name in particular stands out as increasingly interesting, #8, Celestica (CLS).
Celestica (CLS)
Celestica is a Toronto-based electronics manufacturing services company (founded in 1994) that designs and builds advanced hardware platforms, switches, servers, and supply-chain solutions for hyperscalers, aerospace, defense, and HealthTech clients worldwide.
And the big story is its “Connectivity & Cloud Solutions” segment has exploded with AI data-center demand, powering networking gear for the biggest cloud providers.
In Q3, revenue grew 28% to $3.19B (and adjusted EPS rose to $1.58) crushing estimates (and prompting management to hike full-year 2025 guidance, but also to issue massive 2026 targets of $16B for revenue and $8.20 of EPS.
With the shares already up more than 240% this year, Wall Street still loves it (“A” rated) and it remains one of the least-shorted stocks in the BH20.
It was a rough week for AI stocks in general, including Celestica (down 7%), but it trades at an attractive 1.2x forward price/earnings to growth ratio (PEG(f)), and money continue to flows in. It’s profitable and trades at only 3x sales (attractive!).
This is a name I am watching closely and may initiate a position in the near future.
The Bottom Line
We don’t know if this sell-off is closer to its end or its beginning (The BH Market Sentiment Index fell sharply over the last week from 83 to 50!), but we do know the hyperscalers have been spending huge on datacenters, and someone (such as Celestica) has to bring the “picks and shovels” to keep building out all this massive infrastructure.
You may be able to find a few more interesting opportunities in this weeks BH20 Growth Stocks (click the image above for the full report). Enjoy!