CLS reported a year-over-year increase in operating cash flow of 18%, lifting it to $420 million in the most recent quarter. Free cash flow jumped by 25% to $310 million, driven by improved working capital efficiency and higher margins in its carrier and cloud services (CCS) division. Management highlighted that reductions in days sales outstanding and disciplined capital expenditures were key to sustaining this momentum.

Sales in CLS’s AI-powered networking solutions unit rose 22% compared with the prior year, as customers ramped deployments of high-performance switching fabrics. Its electronics manufacturing services (EMS) segment, which includes board-level assembly for hyperscale data centers, contributed 35% of total revenue and grew 30% thanks to robust orders from two leading cloud providers. These trends underscore CLS’s ability to capitalize on the ongoing shift to AI-driven infrastructure.

Over the past 12 months, CLS’s share price surged by 215%, reflecting investor enthusiasm for its cash flow growth and AI exposure. As a result, the stock now trades at approximately 22 times forward EBITDA, up from 16 times a year ago. While this premium valuation signals confidence in future earnings, analysts note that sustaining double-digit free cash flow growth will be critical to justify the higher multiple.

Looking ahead, CLS forecasts revenue growth of 15% to 18% for the full year 2026, supported by a multiyear order backlog totaling $1.2 billion in its CCS and EMS divisions. The company plans to expand its manufacturing footprint in Southeast Asia and invest $100 million in AI-optimized production lines. Investors will be watching whether CLS can maintain its cash conversion ratio above 70% and continue driving margin expansion through automation initiatives.