3M (MMM) shares rose 2% to 159.69 on Wednesday after the company announced that Microsoft Azure is deploying its new expanded beam optics technology for data centers. The stock flashed an early buy signal as it cleared its 200-day moving average and built on a recent breakout, though it backed off session highs of 163.02. The Dow Jones component now has an official buy point of 169.76 from a 22-week cup-with-handle base.
3M's AI Data Center Bet
3M first revealed on its April 21 earnings call that its enhanced beam optical (EBO) technology had received validation and a significant order from a hyperscaler, now confirmed as Microsoft. CEO William Brown gave more detail at a Wells Fargo conference on June 10, saying the company's "inside the data center" business was running at about $100 million and growing more than 50% per quarter. At the end of Q1, 3M pegged the total addressable market for EBO at $1 billion, but Brown noted that just 90 days later the estimate had risen to "north of $2 billion."
In addition to the optical business, 3M generates about $500 million from supplying medium voltage cables and related equipment for bringing power to data centers. The company said Wednesday it is scaling up production of EBO to meet accelerating demand from hyperscalers and other operators building AI infrastructure.
How the Technology Works
According to a June 25 press release, 3M's EBO technology is "more forgiving, more durable and dramatically faster to deploy" than traditional physical fiber connections. Conventional fiber optics require highly precise alignment at the point of contact, often with carefully polished surfaces. EBO uses expanded beam optics that relax those alignment tolerances, making installation quicker and more robust.
Market Context
3M reports Q2 earnings on July 21. The Dow Jones Industrial Average rose 0.3% intraday Wednesday, with Microsoft climbing 3.2% as megacap and software stocks performed well. Meanwhile, traders on prediction markets are betting there is an 88% chance the S&P 500 will soon plunge, according to a related IBD report.