3M (MMM) shares were up 4.4% at about $169 in pre-market trading on Tuesday after the company issued Amazon a stock warrant tied to data center purchases on Monday evening. This morning, 3M followed with third-quarter results and a higher 2026 earnings guide.
The number to watch is $6 billion. Spread evenly over seven years, the purchases that fully vest the payment-linked 85% of the warrant would top 3M’s own forecast for 2026 data center sales, though nothing requires Amazon to buy at an even pace.
What Amazon Got From 3M
- The warrant: up to 3,162,015 shares at $164.89 each over seven years (about $521 million at the exercise price).
- The trigger: 85% of the shares vest as Amazon pays for optical connectivity and other data center products, fully at $6 billion in cumulative payments. The rest vest on event-based milestones.
- What it isn’t: a purchase order. Vesting follows payments; nothing in the filing commits Amazon to spend.
- The precedent: Microsoft (MSFT) became the first announced hyperscaler to deploy 3M’s Expanded Beam Optical connectors on July 15. Amazon (AMZN) is the second big cloud name.
Sizing 3M’s Amazon Deal
Spread evenly over seven years, $6 billion is about $857 million a year. Against the $25.18 billion 3M brought in over the last twelve months, that pace equals about 3.4% of revenue. How much of it is new is unclear: the filing calls this an expanded relationship, so some Amazon purchases may already sit in 3M’s sales.
That matters more than it sounds for a company whose revenue went from $24.61 billion in 2023 to $24.95 billion last year. It’s also big next to the unit it lands in. CEO Bill Brown told a Wells Fargo industrials conference that 3M expects about $600 million from data center work in 2026, so the Amazon pace is 1.4 times that. On the July earnings call, he put the whole market for 3M’s expanded beam technology at about $1 billion this year and $2 billion by 2028.
The share count barely moves: 3,162,015 shares are about 0.6% of 3M’s roughly 540 million diluted shares.
The Fine Print in 3M’s Quarter
The beat is smaller than the headline. Adjusted EPS of $2.50 topped the $2.39 consensus, but 3M now leaves intangible amortization out of adjusted results, which adds about $0.04 to the quarter. Like for like, the beat is closer to $0.07. The guidance raise, to $9.10 to $9.15 from $8.80 to $8.95, folds in the same change plus the Madison Fire & Rescue acquisition. Operating cash flow came in at $0.5 billion against $1.2 billion of adjusted free cash flow.
The warrant has a cost, too. Under US accounting rules, equity granted to a customer reduces revenue, which makes it a rebate paid in stock. 3M hasn’t disclosed the warrant’s fair value or the revenue reduction it expects. The extreme case is Plug Power (PLUG), where Amazon’s warrant drove a $399.7 million revenue reduction in 2020.
The multiple already pays for some of the story. At Monday’s close, 3M traded at 17.46 times normalized NTM earnings, about 15% above its five-year mean of 15.20 times.
Where the Street Stands on 3M Stock
The mean Street target is $185.93, 14.8% above Monday’s $162.01 close and about 10% above Tuesday’s pre-market price. Eight analysts rate the stock a buy and one an outperform, while eight rate it a hold and two an underperform. Targets run from $120 to $218.
The Number 3M Hasn’t Given Yet
The deal is better news than the quarter, and the open question is how much of Amazon’s buying is new. Neither the filing nor the release gives a purchase schedule, a baseline for current Amazon sales or this quarter’s data center revenue.
If Amazon ramps toward the even pace from a small base, 3M’s data center unit could more than double, and 17 times earnings looks fair. If purchases trickle in, the payment-linked portion may never fully vest. If they mostly replace existing purchases, the deal could deliver less incremental growth than investors expect. The 9 a.m. ET call is management’s first chance to put a dollar figure on data center sales.
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