Key Takeaways
- AI‑related stocks continue to outpace the broader market, with the Global X Artificial Intelligence & Technology ETF up 23% in 2026 versus a 13% gain for the Nasdaq Composite.
- Bank of America analyst Vivek Arya expects the build‑out of AI infrastructure to remain a major market driver for the rest of the year.
- Nvidia, despite an 11% year‑to‑date gain, is positioned to benefit from a projected 77% jump in hyperscaler capex to $725 B and a $2.1 T contractual backlog among major cloud providers.
- Celestica has pulled back ~24% from its 52‑week high, offering an attractive entry point after delivering 53% YoY revenue growth in Q1 and 80% YoY adjusted earnings growth.
- Both companies trade at premium forward earnings multiples (Nvidia ~23×, Celestica ~35×) but analysts see upside to 30× earnings by FY2029, implying potential price gains of 129% for Nvidia and 58% for Celestica.
AI’s Momentum Propels Market Gains in 2026
Artificial intelligence remains the primary engine behind the stock market’s advance this year, even as the sector has faced periodic volatility. The Global X Artificial Intelligence & Technology ETF, which holds firms that embed AI into their products or sell AI‑focused hardware and software, has delivered 23% gains in 2026. By contrast, the tech‑heavy Nasdaq Composite index has risen only 13% over the same period. Bank of America analyst Vivek Arya underscores the durability of this trend, stating, “The build‑out of AI infrastructure will continue to be a driving force for the stock market for the rest of the year.” His outlook is reinforced by early‑year strength in AI‑linked names such as Micron Technology, Advanced Micro Devices, and Sandisk, which surged on component shortages and robust demand.
AI Infrastructure Build‑Out Fuels Analyst Optimism
Arya’s confidence stems from the massive capital expenditure plans of the largest cloud operators. He notes that “major hyperscalers noted during the previous earnings season that their capital expenditure for 2026 will increase substantially.” According to the Financial Times, the combined 2026 capex of Alphabet, Amazon, Meta Platforms, and Microsoft is projected to jump 77% to a record $725 billion, far exceeding the earlier $500 billion consensus. This surge in spending is expected to accelerate the construction of AI‑optimized data centers, thereby lifting demand for the chips and systems that power them.
Nvidia’s Current Stumble and Upside Potential
Nvidia (NVDA +3.90%) has endured a lackluster year, posting just 11% gains in 2026. Yet the company’s fundamentals suggest a forthcoming rebound, especially as the earnings season approaches. The stock currently trades around $210.68, with a market cap of roughly $5.1 trillion. Analysts view the upcoming quarterly results as a potential catalyst that could reignite investor enthusiasm for the AI pioneer.
Nvidia’s Dominance in AI Chips and Hyperscaler Spending
Nvidia’s strategic position as the leading designer of AI processors underpins its growth prospects. The article highlights that “the company is the dominant AI chip designer with an estimated market share of 80% to 90%.” Its clientele includes the major hyperscalers and AI labs whose spending plans are set to explode. As hyperscalers increase their capex, Nvidia stands to capture a larger share of the expanding AI data‑center market.
Contractual Backlog Signals Accelerated Demand
Beyond immediate capex figures, a sizable backlog of committed projects further bolsters Nvidia’s outlook. The piece reports that “the combined contractual backlog of Google, Microsoft, Amazon, and Oracle is at a whopping $2.1 trillion.” This backlog implies that cloud providers are poised to break ground on data centers at a faster pace, which will directly increase orders for Nvidia’s GPUs and related systems. The expectation is that this pipeline will sustain strong revenue growth well into the next few years.
Analyst Bullishness, EPS Growth, and Valuation Scenarios
Financial analysts have grown increasingly optimistic about Nvidia’s earnings trajectory. The company posted earnings per share (EPS) of $4.77 in fiscal 2026 (ended January 2026). Consensus forecasts imply a compound annual growth rate (CAGR) of roughly 50% over the next three years. If Nvidia maintains its forward earnings multiple of 23× but the market rewards it with a slight premium to 30× earnings by FY2029, and EPS climbs to an estimated $16.15, the stock could reach $484—a 129% upside from today’s price. The article notes, “Such strong earnings growth is likely to be rewarded with a premium valuation compared to Nvidia’s forward earnings multiple of 23.”
Celestica’s Pullback Presents a Buying Opportunity
Celestica (CLS +1.60%), an electronics manufacturing services provider, has retreated nearly 24% from its 52‑week high reached in early June, creating an attractive entry point for investors. The stock now trades around $360.46, with a market cap of approximately $41 billion. The recent dip follows a period of strong performance, leaving the shares priced below their intrinsic growth potential.
Celestica’s Q1/Q2 Financials and AI‑Driven Growth
Celestica’s connectivity and cloud solutions (CCS) division has been a direct beneficiary of the AI infrastructure boom. The article explains that “the company manufactures networking switches and custom AI processors for hyperscalers and chip designers, such as Broadcom.” In Q1, revenue surged 53% year‑over‑year to $4.05 billion, and Q2 guidance points to $4.3 billion, representing a 49% YoY increase. Adjusted earnings rose 80% YoY in Q1, with Q2 guidance forecasting a 61% jump at the midpoint. These figures underscore how the AI build‑out is translating into both top‑line and bottom‑line acceleration.
Consensus EPS Estimates and Valuation Upside for Celestica
Looking ahead, analysts expect Celestica’s earnings to continue climbing. Consensus models project a 70% increase in EPS for 2026 to $10.29, followed by further healthy gains in subsequent years. The stock currently trades at 35× forward earnings. Assuming the multiple compresses to a more modest 30× after three years and EPS reaches $18.95, the share price could ascend to $568—a 58% gain from current levels. The article captures this scenario: “Assuming it trades at 30 times earnings after three years and its earnings per share reach $18.95, its stock price could jump to $568.” This upside makes the recent pullback a compelling moment to add exposure.
Looking Ahead: Earnings Season as Catalyst
Both Nvidia and Celestica illustrate how the broader AI investment theme is translating into concrete financial performance, despite short‑term price fluctuations. As hyperscalers follow through on their elevated capex plans and work through a massive $2.1 trillion backlog, demand for AI chips, networking gear, and manufacturing services is likely to remain robust. Investors should watch the upcoming earnings reports closely; strong guidance or better‑than‑expected results could act as the trigger that propels these stocks toward the price targets outlined by analysts. In a year where AI continues to drive market leadership, positioning in well‑placed beneficiaries such as Nvidia and Celestica may offer attractive risk‑adjusted returns.
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