3M raises EPS outlook to $9.10–9.15 on pricing, chip demand

Key Facts

3M raised its 2026 adjusted earnings per share outlook to $9.10–9.15 as it reported third-quarter results, according to Investing.com coverage, supported by strong sales to the chip industry and higher prices that boosted margins, Reuters reported. The revision follows an increase in the range to $8.80–8.95 when the company reported second-quarter results, according to its filing with the U.S. Securities and Exchange Commission. The range before that revision was $8.50–8.70 per share, making the latest outlook a continuation of earnings forecast increases during the year. The company had maintained its annual outlook when it reported first-quarter results in April, before raising it alongside results for the following two quarters. Third-quarter adjusted earnings per share were $2.50, beating analysts' expectations of $2.38, according to LSEG data cited by Reuters.

Third-quarter revenue was $6.6 billion, according to Investing.com, with adjusted organic sales growth of 3.3%. Growth slowed from the second quarter, when the company reported a year-on-year increase of 5.4%, according to its earnings release for that quarter. Meanwhile, the adjusted operating margin was 26.2%, according to the company's earnings presentation cited by Investing.com. That represented a year-on-year improvement of 110 basis points, as margins benefited from higher prices, as reported by Reuters. Explaining a change in the calculation of adjusted earnings, the chief financial officer said on the earnings call: "We now exclude amortization of intangible assets from adjusted results."

On demand, Reuters said strong sales to the chipmaking sector helped the company raise its annual earnings outlook. Demand from automotive and consumer electronics customers remained weak, contrasting with growth in markets tied to semiconductors and data centers. Growth in those two areas helped offset weakness among automotive and consumer electronics customers, according to the news agency. Chief Executive Bill Brown said on the earnings call that data center business revenue was expected to reach about $700 million this year. Brown compared that level with revenue of about $550 million last year, according to the call transcript published by Investing.com.

Expanding its relationship with Amazon, 3M granted an Amazon subsidiary a warrant to purchase up to 3,162,015 shares, according to the company's SEC filing. The warrant has a term of 7 years and an exercise price of $164.89 per share, according to the terms of the agreement announced in October. Vesting of 85% of the shares covered by the warrant is tied to Amazon's payments for optical interconnect and data center products supplied by 3M. That portion becomes fully vested when cumulative payments reach $6 billion, a threshold linked to future purchases under the warrant vesting mechanism. Vesting of the remaining shares covered by the warrant is tied to the achievement of specified event-based milestones, according to the same filing.

The agreement followed the announcement of the deployment of 3M's expanded beam optical interconnect technology at Microsoft, according to the second-quarter earnings release issued in July. The company described Microsoft as the first hyperscale cloud provider to announce deployment of the technology, as its optical interconnect business expands. On October 19, 3M also announced a collaboration with GSEO to develop and manufacture optical interconnect solutions, according to Investing.com. The move includes a plan to purchase about 4.7% of the company's common shares through a private placement, subject to customary closing conditions. 3M shares rose more than 5% in extended trading that evening after the announcement of the expanded relationship with Amazon, according to Reuters.

Following the earnings announcement, 3M shares rose 4.14% to $168.72 in the price snapshot included in Investing.com's coverage published on October 20. The move came in the session following the announcement of the expanded relationship with Amazon the previous evening. Developments in the earnings announcement included adjusted earnings beating analysts' expectations and an increase in the annual forecast range, according to the coverage. 3M expects to close its investment in GSEO in the fourth quarter of 2026, according to the investment announcement. The company then plans to provide its formal 2027 outlook in January, according to remarks on the earnings call published by Investing.com.