By Adriano Marchese

Celestica shares rallied Thursday morning on the back of better-than-expected fourth-quarter results and an improved outlook, recovering from a sector-wide shock caused by China's low-cost DeepSeek AI model.

Shares trading in Toronto rose 14% to 165.41 Canadian dollars ($114.70). On Monday, the stock fell over 28%, following sector trends, and regained about 15% before jumping on Thursday.

Celestica logged revenue of $2.55 billion, a rise of 19% from the prior-year period, which topped expectations for a more modest rise of $2.49 billion, according to FactSet.

Fourth-quarter earnings per share rose to $1.29 from 77 cents last year. On an adjusted basis, earnings were $1.11 a share, beating both its own guidance of between 99 cents and $1.09 as well as Wall Street expectations for $1.03 a share.

On Monday, Celestica's shares fell in lockstep with other tech companies as DeepSeek's low-cost AI model rattled the sector. The emergence of the AI startup company, a chatbot competitor to OpenAI, challenges the conventional thought that companies using AI, such as Celestica, need expensive, cutting-edge computer chips that are powered by data centers and require massive energy supplies. Celestica's decline followed those of other major players in the AI world, including chipmaking giant Nvidia and Microsoft.

In its earnings release late Wednesday, Celestica didn't mention DeepSeek, but raised its 2025 full-year revenue outlook to $10.7 billion, up from a previous expectation of $10.4 billion.

Adjusted earnings per share are also expected higher at $4.75, up from previous outlook for $4.42.

"Overall, the current demand environment for data center hardware is robust, as evidenced by recent customer forecasts as well as new AI program awards over the last 90 days," Chief Executive Rob Mionis said.

Write to Adriano Marchese at adriano.marchese@wsj.com

(END) Dow Jones Newswires

January 30, 2025 10:26 ET (15:26 GMT)

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