By Nandan Mandayam
Oct 20 (Reuters) – 3M lifted its 2026 profit forecast on Tuesday, a day after its expanded data-center partnership with Amazon signaled a growing focus on AI-linked offerings, sending the industrial conglomerate’s shares up nearly 5%.
Robust industrial activity in the US as well as growing sales of chipmaking machines and materials as a result of the AI boom have helped the company offset uneven demand in some end markets affected by inflationary pressures.
3M’s forecast raise comes on the back of strong sales to chipmakers and higher prices that supported margins, as major technology companies increasingly spend on building out their data center infrastructure to support AI ambitions.
The deal, announced on Monday, also allows Amazon’s unit to buy 3M stock worth $521 million through the next seven years as it purchases more data center components.
While demand from 3M’s automotive and consumer electronics customers has remained subdued, growth tied to data centers and semiconductor-related markets has proved to be a bright spot, helping cushion weakness in some of its traditional end markets.
3M supplies electrical components used outside data centers and expanded beam optics (EBO) connectors, or contactless connectors that are used inside data centers. It counts AI hyperscalers such as Amazon Web Services and Microsoft Azure among its EBO customers.
EBO sales, which are a smaller part of data center sales, will likely double to between $80 million and $100 million in 2027, from around $40 million expected this year, CEO William Brown estimated in an earnings call.
The Scotch-tape and Post-it maker reported adjusted quarterly revenue of $6.6 billion, up 4.2%.
Its quarterly adjusted profit came in at $2.50 per share, above estimates of $2.38, per LSEG-compiled data.
The company expects full-year adjusted profit per share of between $9.10 and $9.15, compared with $8.80 to $8.95 previously.
(Reporting by Apratim Sarkar and Nandan Mandayam in Bengaluru; Editing by Devika Syamnath)
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