3M Stock Jumps Nearly 6% on an Amazon Data Center Deal and an Earnings Beat: How the $6 Billion Warrant Works

3M, the Minnesota-based industrial company, just got a vote of confidence from Amazon, one of the biggest builders of AI data centers. Investors noticed, and the stock jumped on Tuesday, Oct. 20.

Shares rose 5.78% to close at $171.37, according to The Motley Fool, after 3M expanded a data center partnership with Amazon and reported third-quarter results that topped forecasts. The deal comes with an unusual twist that's worth understanding: Amazon could end up owning a small piece of 3M.

Why did 3M stock jump on Oct. 20?

3M stock rose 5.78% to $171.37 on Tuesday, Oct. 20, after the company expanded its relationship with Amazon to supply optical connectivity and other data center products, and gave Amazon a warrant tied to up to $6 billion in purchases. 3M also beat third-quarter profit estimates and raised its full-year earnings outlook.

The Amazon news came out Monday evening in a securities filing, and the stock rose 5.5% in overnight trading, Yahoo Finance reported. Optical connectivity products help move data quickly between servers using light over fiber, a growing need as tech giants build bigger data centers for artificial intelligence.

Other optical stocks moved less. Coherent gained 1.33% and Corning slipped 0.21% during Tuesday's session, according to 24/7 Wall St.

How does the Amazon warrant work?

A warrant is a contract that gives its holder the right to buy shares at a set price, called the exercise price, for a set period. 3M issued a wholly owned Amazon subsidiary a seven-year warrant for up to 3,162,015 shares at $164.89 a share, according to the filing as reported by Yahoo Finance.