The Buildout Keeps Delivering
The AI buildout keeps advancing, and earnings reports have been showing us where the spending is landing. In July, we highlighted ASML’s second-quarter results: AI demand was prompting customers to accelerate their capacity plans, and ASML planned to expand key production capacity by 30% in 2027.
The AI Buildout is Accelerating
Fresh results from ASML and Aehr reinforce what Micron and Penguin Solutions told us.
In August, SiTime supplied another example. Its second-quarter revenue rose 127%, while communications, enterprise and data-center revenue climbed 181%. Demand was reaching specialized components throughout the AI infrastructure stack.
The AI Buildout Keeps Accelerating
Results from SiTime, Sandisk, SpaceX, and Aeva show how accelerating AI demand is spreading through the infrastructure stack.
Celestica Shows What A Beat Can Do
A number of companies tied to that buildout have strong fundamentals and badly damaged stocks. Celestica (CLS 0.00%↑), for example, was down more than 30% over the preceding month heading into yesterday’s earnings report.
Then Celestica beat earnings expectations. Third-quarter revenue rose 83%, adjusted earnings per share more than doubled, and management forecast $40 billion of revenue for 2027. CLS was up more than 15% in premarket trading this morning.
A Modest Rebound Can Be Enough
Like CLS, the stock we’re trading today is down about 30% over the last month, has strong fundamentals, and is closely tied to the AI buildout. It reports earnings this week.
Zacks’ Earnings ESP (Expected Surprise Prediction) points to a potential earnings beat. We’re betting that a beat could bring a similar reaction to Celestica’s.
Our trade only needs a modest rebound by expiration to reach our target: about a 175% gain if we’re right, measured against our maximum risk and before fees.
The stock, maximum entry price and planned exit order are below.
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Today’s Market Watchers Trade
Theme: AI infrastructure demand supports an earnings rebound.
RSI: 34; Chartmill Technical Rating: 4; Setup Rating: 4; Fundamental Rating: 7.
