Celestica, Inc. CLS and Arista Networks Inc. ANET are major players in the AI infrastructure domain. The AI infrastructure sector is rapidly evolving and expected to grow at a substantial rate in the upcoming quarters. Growing digital transformation initiatives across industries, growing proliferation of AI-powered IoT ecosystem, AI data center expansion fueled by rising demand for high-performance computing and cloud networking solutions, are expected to drive this growth.
Per a report from Precedence Research, the AI infrastructure market was valued at $72.02 billion in 2025. It is expected to grow at 23.05% compound annual growth rate between 2025 and 2034. With a strong focus on innovation, both Celestica and Arista are rapidly expanding their portfolio offerings to capitalize on this emerging market trend.
Arista is set to benefit from massive growth in the AI ecosystem and growing spending on AI infrastructure buildouts by hyperscalers. Enterprises across industries are steadily adopting generative AI applications, IoT devices, cloud computing and 5G technologies across their operations. AI workloads are becoming larger, more distributed and more complex. In this scenario, robust networking architecture and synchronization between GPUs become critical for data transfer across locations and for avoiding congestion. This is driving demand for Arista’s data center switching, data center interconnect and high-performance routing solutions.
The company recently introduced XPO liquid-cooled optical modules engineered to support high bandwidth and density requirements for AI networking in large-scale data centers. With an impressive 12.8 Tbps capacity each, the modules enable a single Open Compute Project (OCP) rack unit to reach a total front-panel capacity of 204.8 Tbps. This is four times higher than the legacy 1600G Octal Small Form-factor Pluggable (OSFP) optics. This reduces the requirement for physical infrastructure expansion, allowing data centers to support higher data traffic at a lower cost. Such innovative launches bode well for sustainable growth.
However, Arista faces stiff competition from other major players in the AI networking space, such as Cisco and Hewlett Packard Enterprise HPE. Cisco is the dominant player in the data center networking market by virtue of its diverse portfolio of IP-based networking products. HPE is benefiting from a robust demand environment for its edge-to-cloud platform, GreenLake, backed by growing digital transformation initiatives. With the acquisition of Juniper Networks, HPE has significantly strengthened its networking domain in AI, cloud and hybrid solutions. Rising competition can impact Arista’s growth prospects.
Moreover, to maintain its competitive edge, the company has to enhance its existing product line and develop new technologies and products that address emerging technological trends, evolving industry standards and changing end-customer needs. This is driving up the operating expenses. The memory shortages, such as DDR4, and rising silicon fabrication costs are also raising the expenses. This is straining margins.
The company derives a large portion of its revenues from a limited number of customers. Its top-line growth is heavily tied to hyperscalers’ AI spending. Constraint spending due to macro headwinds and geopolitical volatility can impact its top-line growth.
Celestica is witnessing solid momentum in the AI data center market backed by its comprehensive portfolio. Competitive edge in today’s digital world depends on real-time analytics of that vast information, which helps organizations to make informed decisions. Hence, businesses worldwide are rushing to develop high-performance computing infrastructure and utilize AI data centers. Hyperscalers such as Microsoft, Amazon and Google are expanding their data center footprint to match these requirements.
These AI investments are driving demand for Celestica’s enterprise-level data communications and information processing infrastructure products, such as routers, switches, and data center interconnects. Growing adoption of 800G switches, driven by the growing usage of high-bandwidth-intensive AI applications, remains a major growth driver. Celestica recently entered into a strategic collaboration with Advanced Micro Devices to develop a next-generation rack-scale AI platform. It has also collaborated with Broadcom to develop the TH4-12.8T switch chipset. Such innovative product launches allow it to gain a competitive edge in the industry and bode well for long-term growth.
CLS’ diverse end market presence is a major advantage. Its customer base includes several leading manufacturers from multiple industries, including communication, healthcare, aerospace and defense, energy, semiconductor and various cloud-based and other service providers.
Celestica is placing strong emphasis on strengthening its global supply chain network. Amid growing geopolitical unrest worldwide, companies across sectors are increasingly affected by supply chain disruptions and procurement delays, leading to loss of business opportunities. Higher raw material purchasing costs and logistics expenses stemming from supply chain issues are straining operating margin growth.
With a presence across 16 countries worldwide, Celestica’s diversified manufacturing network and resilient supply chain are paying off well to mitigate the effects of geopolitical volatility and tariff-related uncertainties. It is steadily expanding capacity and capabilities at its facilities in Richardson, United States, Thailand and Malaysia to support the growing demand for its industry-leading AI data center products. It is also investing in design centers in India, Malaysia and the United States. Moreover, its vertically integrated manufacturing allows Celestica to efficiently scale up supply in response to changing demand trends.
The Zacks Consensus Estimate for CLS’ full-year sales implies year-over-year growth of 51.16%, while that of EPS suggests growth of 72.5%. The EPS estimates have been trending northward over the past 60 days.
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The Zacks Consensus Estimate for ANET’s 2026 sales and EPS implies year-over-year growth of 30.13% and 24.62%, respectively. The EPS estimates have increased over the past 60 days.
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Over the past year, Celestica has gained 194.8%, while ANET has gained 59.1% over the same period.
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CLS looks more attractive than Arista from a valuation standpoint. Going by the price/earnings ratio, Celestica’s shares currently trade at 28.13 forward earnings, lower than 37.04 for Celestica.
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Celestica carries a Zacks Rank #2 (Buy), while Arista boasts a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Both Celestica and Arista are set to gain from the rapidly expanding AI infrastructure domain. However, Arista is exposed to growing competition and supply chain issues. Rising component costs are driving up the operating expenses and impeding margins. Celestica’s focus on product diversification and increasing its presence in high-value markets is positive. Its robust supply chain network is increasing its reliability among hyperscalers. Hence, with a superior Zack Rank, better price performance and attractive valuation, Celestica appears to be a better investment option at present.
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