Capitalize on the artificial intelligence infrastructure boom by investing in Celestica (CLS), a hardware leader trading at a reasonable 12 times projected operating income with upgraded multi-year growth targets.

Consider adding EXL Service Holdings (EXLS) to your portfolio for exposure to enterprise automation and artificial intelligence adoption, which currently trades at an attractive valuation of roughly 13 times adjusted earnings.

Watch EXLS closely as it leverages strong organic growth and a flourishing healthcare segment, which recently drove management to raise full-year guidance by 4 percentage points.

Monitor Celestica for ongoing data center demand to ensure the company successfully meets its raised 2026 and 2027 financial outlooks.

Exercise extreme caution with Bloom Energy (BE) given its high valuation of 70 times earnings and capital-intensive business model, despite its explosive revenue growth driven by data center power needs.

Celestica (CLS)

• Canadian hardware company benefiting from the artificial intelligence data center boom, offering products like network switches, optical systems, data center racks, and servers
• Reported a strong second quarter with a 62% increase in revenue to $4.7 billion, an 83% jump in adjusted earnings, and a record operating margin of 8.2%
• Raised its financial outlook for both 2026 and 2027, which provides greater revenue visibility
• Valuation sits at a $40 billion market capitalization, which could equate to about 12 times operating income if projected future sales and margin expansions are met
• Risk factors include a potential aggressive slowdown in the overall data center build-out

Takeaways

• Look into Celestica if you want exposure to the physical infrastructure powering artificial intelligence
• Monitor the broader data center build-out trend to ensure demand remains strong and supports the company's multi-year growth targets

EXL Service Holdings (EXLS)

• Helps large enterprises improve business processes through data analysis, automation, and outsourcing with a workforce of over 68,000 staff
• Successfully pivoted into artificial intelligence services, contributing to accelerating second-quarter revenue growth of 15% and a 22% jump in adjusted earnings
• Raised full-year financial guidance by 4 percentage points, supported by strong organic growth forecast at 13% to 14% and a flourishing healthcare segment growing at 22%
• Trades at an attractive valuation of around 13 times adjusted earnings based on current guidance
• Growth is driven by a mix of organic expansion and strategic moves like the acquisition of the artificial intelligence platform iMerit

Takeaways

• Consider EXL Service Holdings as a way to invest in enterprise automation and artificial intelligence adoption without relying solely on hardware manufacturers
• Evaluate the company's valuation of 13 times adjusted earnings against its steady organic growth and healthcare sector momentum

Bloom Energy (BE)

• Builds natural gas fuel cells that generate on-site electricity, allowing hyperscalers to bypass long utility delays when powering artificial intelligence data centers
• Reported explosive second-quarter results with revenue growing 165%, product revenue surging 215%, operating cash flow hitting $226 million, and management projecting full-year sales to double
• Exhibits high volatility, with shares trading at approximately 15 times sales and 70 times earnings even after falling more than 40%
• Risk factors include a capital-intensive business model, high valuation multiples, and the possibility that current revenue is being boosted by pulled-forward orders from hyperscalers

Takeaways

• Approach Bloom Energy with caution due to its high valuation and the difficulty of determining whether its current growth pace can be sustained long-term
• Weigh the massive demand from data center power needs against the risks of a capital-intensive business model and potential pulled-forward customer orders