Celestica Inc. (TSX:CLS, NYSE:CLS) now depends on three customers for about two-thirds of its sales. Its Quarterly Report for the period ended September 30, 2026, filed with the U.S. Securities and Exchange Commission, shows its three largest customers made up 35%, 17% and 14% of total Revenue in the third quarter. That is 66% combined, up from 59% a year earlier. The concentration has paid off: revenue grew 83% and adjusted Earnings Per Share more than doubled. It also means the company's US$40 billion target for 2027 rests on a small number of hyperscale buyers continuing to spend.

What the Latest Filing Shows About Customer Concentration

According to the 10-Q, all three customers above the 10% threshold sit in the Connectivity and Cloud Solutions (CCS) segment. The largest customer's share rose to 35% in the third quarter from 30% a year earlier. Over the first nine months of 2026, the three accounted for 34%, 16% and 15% of revenue, or 65% combined, compared with 56% in the same period of 2025. Celestica does not name these customers in the filing.

The trend matters because Celestica's revenue base has grown very quickly. Third-quarter revenue reached US$5.83 billion, up from US$3.19 billion a year earlier. CCS revenue rose 102% to US$4.87 billion, while the Advanced Technology Solutions (ATS) segment grew 23% to US$0.96 billion. With CCS now more than four-fifths of revenue, the mix has tilted strongly toward data centre networking, storage and compute programs.

Why Hyperscale Demand Has Concentrated the Business

Celestica builds networking switches, servers and storage hardware for cloud and AI data centres, alongside its longer-standing aerospace, defence, industrial and health-tech work in ATS. At its October 27 investor and analyst day, management described multi-generational work on Google's TPU platform and a production ramp for OpenAI's Jalapeño platform. Management also said some hyperscale customers are moving to multi-year capacity planning with the company.

Concentration is common across the AI hardware Supply chain, because only a few companies spend on data centres at this scale. For Celestica, the result has been strong operating leverage. The CCS segment Margin improved to 8.9% from 8.3%, and the company-wide adjusted Operating Margin rose to 8.5% from 7.6%. Adjusted EPS climbed 109% to US$3.30, and GAAP EPS reached US$3.26.

How Guidance Depends on a Narrow Group of Buyers

Celestica raised its 2026 outlook to revenue of about US$21.0 billion and adjusted EPS of US$11.55. Its initial 2027 outlook calls for revenue of about US$40.0 billion, adjusted EPS of US$21.50 and an adjusted operating margin of 9.0%. Fourth-quarter 2026 guidance is revenue of US$6.275 billion to US$6.575 billion and adjusted EPS of US$3.37 to US$3.57.

To support that growth, the company plans Capital spending of US$1.5 billion to US$2.0 billion in 2027 and is expanding facilities in Texas, Thailand and Mexico. It lowered its 2026 free Cash Flow outlook to about US$460 million from US$600 million because of Working Capital Investment ahead of the 2027 ramps. Much of that spending is effectively tied to programs for the same few customers. If one of them delays a build, changes suppliers or brings work in-house, Celestica could end up with underused capacity and inventory.

Where the Balance Sheet and Buyback Fit In

Celestica has strengthened its funding base. The 10-Q says the company completed a public offering of 11.1 million common shares on August 7, 2026, which raised net proceeds of about US$3.39 billion. The company's results release puts aggregate gross proceeds at US$3.45 billion. Free cash flow was US$127.5 million in the third quarter and US$412.5 million over the first nine months.

On October 30, Celestica said the Toronto Stock Exchange had accepted a new normal course issuer bid (NCIB). The bid allows repurchases of up to 3,132,127 common shares, about 2.5% of the public float, between November 3, 2026, and November 2, 2027. Celestica had 126.1 million shares outstanding as of October 20. The company said purchases may be funded from cash and Credit Facility draws, and repurchased shares will be cancelled. Under the previous bid, it bought back US$22.6 million of shares in the first nine months of 2026 and none in the third quarter.

What Risks Investors Are Weighing

Several risks follow from the concentration. The first is bargaining power. Large buyers can push on pricing and terms, which could limit margin gains even as volumes rise. The second is program timing. Management has said it is watching working capital efficiency, supply chain lead times and factory utilization, and that AI compute remains constrained by power and hardware availability. Delays in data centre power hook-ups could push revenue into later periods. The third is technology transitions. Management expects 1.6T networking revenue to exceed 800G revenue in 2027, and each generational shift brings qualification risk.

Trade policy is a further consideration for a Toronto-headquartered company with plants across North America and Asia. The 10-Q lists trade conflicts, tariffs, interest rates and geopolitical conflict among sources of economic uncertainty. Finally, shares of fast-growing hardware suppliers can react sharply to any sign of slowing hyperscale spending, even if Celestica's own results stay on track.

For comparison, the concentration is high but not unique among Canadian technology suppliers. Large AI and cloud programs tend to tie contract manufacturers closely to a handful of platform owners. Celestica's diversified ATS segment, which grew 23% in the quarter with a 6.6% margin, offers some offset. At under one-fifth of revenue, however, ATS cannot replace CCS if hyperscale demand weakens.

Conclusion

Celestica's latest filing shows its rapid growth comes with greater dependence on a few customers. In the third quarter, three hyperscale accounts generated 66% of revenue, and the largest reached 35%. These relationships underpin the company's raised 2026 outlook, its US$40 billion 2027 target and a capital program of up to US$2.0 billion. The Equity raise in August and a newly accepted NCIB give the company financial flexibility. Even so, its outlook over the next several quarters will depend largely on whether these few buyers keep their build schedules. Investors following TSX:CLS may want to watch for changes in customer percentages, working capital trends and any comments on program timing in the fourth-quarter report.