3M shares jump after it gives Amazon a warrant tied to $6 billion in data-center purchases

3M has given Amazon the right to buy up to 3.16 million of its shares at $164.89 each, with most of that right vesting only as Amazon buys the industrial company's fiber-optic connection gear and other data-center products, 3M disclosed on Monday, Oct. 19. 3M's stock rose about 5% in after-hours trading.

What 3M agreed to

3M said in a securities filing after the market closed on Monday that it had entered an "expanded strategic commercial relationship" with an Amazon subsidiary. As part of it, 3M issued a separate Amazon unit a warrant to buy up to 3,162,015 of its shares over seven years at $164.89 each.

Most of that warrant depends on how much Amazon spends. Of the shares, 85% vest as Amazon pays 3M for "optical connectivity and other Data Center products," and that portion vests in full once cumulative payments reach $6 billion. The other 15% vest on what the filing calls event-based milestones, which it does not describe.

If Amazon exercised the entire warrant, it would pay about $521 million for the shares, a figure Reuters also reported. The resulting stake would be less than 1% of 3M, The Wall Street Journal noted. The exercise price sits slightly above Monday's closing price of $162.01.

A threshold, not an order

The $6 billion figure is the spending level at which most of the warrant vests. It is not a contract value or a sales forecast. The filing gives no delivery schedule, no minimum annual purchases and no deadline for reaching that level, so it does not say how much 3M will actually sell to Amazon or when.

What the structure does is tie the two companies' interests together. Amazon earns the right to buy 3M stock at a fixed price only as it buys 3M products, so the more it spends, the more it stands to gain if 3M's shares rise. Amazon has previously taken warrants in other suppliers, including Generac and Qualcomm, according to the Journal. Reuters noted that the agreement comes as large technology companies increase spending on data-center infrastructure for artificial intelligence and cloud computing.

3M's bet on data-center optics

The agreement is the latest step in 3M's effort to sell fiber-optic connection gear to the companies building AI data centers. Its main product there is called Expanded Beam Optical, or EBO. Traditional fiber connectors join two fibers by direct contact. EBO uses an expanded beam of light instead, which 3M and Microsoft have said makes connections faster to install, more tolerant of dust and easier to maintain.

In March, 3M said EBO had been in mass production and commercially available since late 2024, and announced a plan to more than double its U.S. manufacturing capacity. In July, Microsoft said its Azure cloud would become the first announced hyperscale cloud provider to deploy the technology. Monday's filing does not say which products Amazon will buy or whether EBO is among them.

On the same day, 3M announced a manufacturing collaboration on EBO with Taiwan's Genius Electronic Optical Co., known as GSEO, and said it expects to buy about 4.7% of GSEO's shares in a private placement. "By selecting GSEO as a manufacturing partner and investing in the company, we are strengthening the path to scale next-generation optical connectivity solutions for high-performance data center infrastructure," Chief Executive William Brown said. 3M did not link that investment to the Amazon agreement.

How the stock reacted

3M shares closed the regular session on Monday at $162.01, down 1.7% from Friday. After the filing, they rose as high as $170.97 in after-hours trading and were at $170.37, up 5.2%, at 7:04 p.m. ET, according to Yahoo Finance data. That put the stock above the warrant's exercise price. At Monday's close the shares were up about 1% this year and about 12% below their 52-week high of $184.90.

What comes next

3M holds its third-quarter earnings call at 9 a.m. ET on Tuesday, Oct. 20, the first chance for analysts to question management about the agreement. The company expects the GSEO investment to close in the fourth quarter.