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Global spending on AI infrastructure is still rising fast. Goldman Sachs Group (GS) says hyperscaler capital spending is on track to reach roughly $757 billion in 2026, as Amazon (AMZN), Microsoft (MSFT), Alphabet (GOOGL), and Meta Platforms (META) keep building out their AI systems.
That comes on top of a data center deal market that already topped $61 billion through 2025, and some forecasts now put global AI infrastructure spending at as much as $6.7 trillion by 2030, with about $3.1 trillion of that going to AI chips and data centers alone. That kind of demand is what has brought 3M Company @MMM into the AI conversation.
On July 15, 3M Company said it was teaming up with Microsoft Corporation to push AI data center infrastructure forward, and Microsoft’s Azure Cloud became the first announced hyperscale cloud provider to use 3M’s Expanded Beam Optical (EBO) technology.
The stock jumped 2.52% to $160.53 on the news. Then, on July 21, 3M Company beat second-quarter estimates, with adjusted EPS of $2.40 versus $2.25 expected. Management also raised full-year adjusted EPS guidance to $8.88 at the midpoint, up 3.2% from the prior view, and the stock climbed as much as 7.32% the next session.
So is 3M Company starting to get re-rated as an AI infrastructure play?
A Better Quarter For 3M
3M Company makes products in materials science, safety, consumer, and electronics, so its results usually show how well the company is handling demand and running the business. Over the past year, the stock is up 12.68%, and it has gained 6.41% year-to-date (YTD).
It also trades at a forward price-to-earnings ratio of 18.20 times, below the sector average of 21.00 times, so the market is not giving it a big premium yet.
3M Company yields $3.02, or 1.77% on the most recent figure, with a quarterly payout of $0.780 as of May 22. Its forward payout ratio is 35.12%, it pays quarterly, and it has raised its dividend for two straight years. That is not a long streak, but it does show some consistency, especially with the materials sector average yield at 2.82%.
The quarter was stronger too. 3M Company reported GAAP sales of $6.5 billion, up 2.4% from a year earlier, while GAAP EPS rose 33% to $1.78 and the operating margin came in at 15.1%. On an adjusted basis, sales were still $6.5 billion, organic growth was 5.4%, adjusted operating margin was 24.9%, up 40 basis points, and adjusted EPS was $2.40, up 11%.
Cash flow also looked solid, with $1.0 billion in operating cash flow and $1.3 billion in adjusted free cash flow, while the company returned $1.4 billion to shareholders through dividends and buybacks. Management then raised full-year 2026 guidance, now expecting adjusted EPS of $8.80 to $8.95, adjusted sales growth above 4.5%, adjusted organic growth above 3.5%, adjusted operating margin expansion of 70 to 80 bps, and adjusted operating cash flow of $5.8 billion to $6.0 billion.
What’s Driving The New Outlook?
3M Company’s deal with Microsoft Corporation links 3M’s materials science and manufacturing know-how with Microsoft’s Azure Cloud and AI work. Azure is the first announced hyperscale cloud provider to use 3M’s Expanded Beam Optical technology, and the idea is simple: easier fiber installation, less trouble from contamination, lower maintenance, and better performance in crowded data centers.
Microsoft’s early use of the technology has already pointed to faster deployment in some cases, and testing has shown strong signal performance even when dust and regular handling are part of the job.
Also, 3M Company rolled out Ask 3M, an AI-powered tool for industrial customers. It gives users direct access to technical help using verified documents and knowledge from 49 technology platforms. Right now, it focuses on industrial adhesives and tapes, but 3M plans to widen it over time. Customers can ask in plain language, compare options, check product details, and solve application problems faster. In testing, it even helped with a real manufacturing issue involving polypropylene thermoplastic and insulation foam within a 24-hour cure window.
Analysts' Views On 3M
The most recent earnings release came on July 21. Analysts saw EPS come in at $2.35 in the current quarter, up from $2.19 a year ago, and $8.88 for fiscal 2026 versus $8.06 last year, which points to 7.31% growth for the quarter and 10.17% growth for the full year.
That view helps explain the reason JPMorgan’s Chigusa Katoku kept a “Hold” rating but raised the price target to $178. At the time, that suggested about 24.6% upside. The call was based on better cash flow, progress in restructuring, and stronger demand tied to AI infrastructure, which could help steady earnings and ease some of the pressure from older legal issues.
Bernstein took a more cautious view, starting coverage with an “Underperform” rating and a $131 target. The firm pointed to litigation risk, execution issues, and a slow recovery in industrial demand, warning that the stock could fall short if hopes around its AI exposure get ahead of the actual business impact.
Still, the overall analyst tone remains fairly positive. Of 17 analysts surveyed, a consensus rates MMM a “Moderate Buy”, with the average price target of $174.59. From current price levels, that implies a marginal 2.4% upside.
Conclusion
3M’s latest update does make the stock look a bit more interesting, especially with the Microsoft deal, the AI-driven product push, and a raised outlook all landing at the same time. The business still has some baggage, but the stronger quarter and better guidance suggest the turnaround is gaining traction rather than losing it. MMM is more likely to grind higher than to break out sharply right away, with the AI story and improved earnings support helping it hold up well. The upside may not be explosive from here, but the path of least resistance still looks constructive.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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