3M Lifts 2026 Profit Forecast as Amazon Data-Center Deal Adds Spark

3M (MMM) is best known for Post-it notes and Scotch tape, but its stock got a lift on Tuesday from something far more high-tech: optical connectors for data centers. Shares rose roughly 6% at midday after the company raised its 2026 profit forecast and expanded its tie-up with Amazon.

Two pieces of news landed together. The company reported third-quarter results on Tuesday morning, a day after an SEC filing laid out the Amazon relationship. Together they gave investors a reason to rethink a name many had filed under "slow industrial."

The results first. According to 3M's own earnings release, adjusted earnings were $2.50 a share, up 12% from a year ago, on adjusted sales of $6.6 billion, up 4.2%.

Adjusted operating margin reached 26.2%, up 110 basis points. Adjusted free cash flow was $1.2 billion, and the company returned $0.6 billion to shareholders through dividends and buybacks.

Full-year guidance moved up too. CNBC reported that 3M now expects adjusted EPS of $9.10 to $9.15, compared with $8.80 to $8.95 before. Management also expects adjusted organic sales growth above 3.5% and adjusted free cash flow of about $4.8 billion.

"Improving productivity through structural transformation and a stronger pipeline of differentiated technologies reinforce our confidence in the full-year outlook." — William Brown, Chairman and CEO, 3M

Before you take the raise at face value, read the footnote. 3M changed how it calculates adjusted earnings, now excluding amortization of intangibles, and said that adds about 4 cents to Q3 EPS. The new guidance also includes the Madison Fire & Rescue acquisition.

So part of the bump is accounting and acquisition, not pure operating improvement. The underlying story is still decent: the company says year-over-year comparisons aren't materially affected because every period was restated on the same basis.

Also worth noticing is the gap between adjusted and reported growth. GAAP sales rose just 1.0%, with organic growth of 0.2%. The 4.2% adjusted figure excludes manufactured PFAS products, so the headline looks better than the unfiltered top line.

Now the Amazon piece. In its filing, 3M said it issued a seven-year warrant to an Amazon subsidiary covering up to 3,162,015 shares at $164.89 each.

Details from The FINANCIAL's reading of the filing show that 85% of those shares vest as Amazon's payments for optical connectivity and other data-center products reach $6 billion.

At the exercise price, that's roughly $521 million of stock. The key point is that the $6 billion is a threshold for cumulative purchases over time, not sales already booked. The main portion of the warrant only vests if Amazon actually buys that much.

This isn't a one-off. 3M also announced a collaboration with Taiwan's Genius Electronic Optical and plans to buy about 4.7% of its shares.

In July it said Microsoft Azure would be the first hyperscaler to deploy its Expanded Beam Optical technology. The pattern is a company trying to build a second growth engine.

The risks are straightforward. Automotive and consumer-electronics demand is still subdued, consumer-facing businesses face cautious spenders, and CNBC noted that higher energy costs raise concerns about industrial demand. Data centers are a bright spot, but they're not yet large enough to offset everything else.

Valuation is the other worry. After a 6% jump, some commentators argue the Amazon news is already in the price. That's a fair debate, and it's why the next few quarters of actual data-center revenue matter more than any warrant.

What to watch: whether 3M quantifies data-center sales on future calls, whether Amazon purchases ramp toward that $6 billion threshold, and whether the margin gains hold if industrial demand cools. Investors who missed Tuesday's move may prefer to wait for that evidence rather than chase.

Bottom line: 3M's turnaround looks real, but the Amazon deal is a promise, not revenue, so judge it by what shows up in the numbers.