Celestica (CLS.TO)(CLS) shares fell nearly 17 per cent on Thursday, as investors considered the software and hardware producer’s upsized spending plans for 2026.

Once a part of IBM’s (IBM) Canadian subsidiary, Toronto-based Celestica describes itself as a leader in data centre infrastructure and advanced technology solutions. The company reported fourth-quarter financial results after Wednesday’s closing bell, beating analyst estimates for sales, while raising its profit guidance for the year ahead.

At the same time, Celestica says it’s eyeing 2026 capital spending of about $1 billion, or six per cent of its latest revenue guidance. RBC Capital Markets analyst Paul Treiber says the company pegged its 2026 spending plan at two to 2.5 per cent of revenue in its guidance last quarter.

Toronto–listed shares closed 13.54 per cent lower on Thursday at $403.89.

RBC says investors shouldn’t bristle at Celestica’s new spending plan.

“Celestica is expanding its manufacturing capacity to support higher production of Google’s TPU servers,” Treiber wrote in a note to clients Wednesday evening. “While increased capex is a near-term cash outflow, higher production capacity increases visibility to sustained growth momentum.”

Treiber maintains a US$400 price target on Celestica’s New York-listed stock, with an “Outperform” rating. Earlier this week, he cut his price targets on seven Canadian technology stocks, citing risk from artificial intelligence (AI) disruption.

Last week, a senior economist at the world’s second-largest asset manager described AI as a “regime change” for global productivity and economic growth. Vanguard Group’s Kevin Khang also warned of “a lot of hype in the current U.S. equity market” and a rotation away from the “Magnificent Seven” or “Mag 7” cohort — Alphabet (GOOG)(GOOGL), Amazon (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA). Yahoo Finance