Industrials Heavyweight 3M Wants A Piece Of The AI Fiber Optics Boom — GLW, COHR, LITE Should Take Note

• 3M’s EBO technology uses a wider optical pathway, making connections more durable and reducing cleaning and maintenance needs.
• The company is focusing on improving network connections that support AI workloads rather than competing in chips or optical components. 
• 3M stock notched its best day in eight months after strong Q2 earnings and guidance. 

3M Co. (MMM) is emerging as an unexpected beneficiary of artificial intelligence as Microsoft Azure deploys its Expanded Beam Optical (EBO) fiber-optic technology to ease connectivity bottlenecks in hyperscale data centers, positioning the industrial conglomerate to capitalize on surging demand for AI infrastructure.

AI Infrastructure Creates New Demand For 3M

Last week, Microsoft Corp. (MSFT) said it has selected 3M’s EBO technology for use across its Azure AI data center operations, highlighting the growing importance of physical networking solutions as AI infrastructure expands. 

Microsoft said its Azure infrastructure will integrate 3M’s optical solution to improve the speed and reliability of fiber connections inside large-scale computing facilities. The project combines Microsoft’s cloud expertise with 3M’s manufacturing and materials science capabilities to support rising demand from AI workloads.

Traditional fiber connectors require direct contact between extremely small glass components, creating maintenance challenges when dust or other contaminants degrade performance. 3M’s EBO technology uses an expanded optical pathway that allows signals to travel across a small gap, reducing the need for repeated cleaning and inspection during installation.

As companies build larger and more powerful AI data centers, older networking systems are struggling to keep up. They need faster connections and easier installation methods. 3M is improving the way fiber cables connect with each other instead of making chips or optical devices. 

3M stock edged 0.3% lower in Wednesday’s premarket. 

3M’s Position In The Optical Ecosystem

3M’s strategy complements companies already supplying other parts of the AI networking chain. Corning (GLW) focuses on advanced fiber and cable infrastructure, while Coherent (COHR) and Lumentum Holdings (LITE) develop optical components and laser technologies. Together, these companies represent different layers of the expanding AI connectivity market.

3M targets the physical link layer interface—providing the precision molded ferrule "socket" that connects Corning’s glass to Coherent/Lumentum’s active transceivers without requiring cleanroom conditions during installation. 

According to a report from The Insight Partners, the expanded beam connector market is expected to grow as demand rises for faster, more reliable optical connections in data centers, telecom networks, 5G infrastructure and harsh industrial environments. The market is projected to reach $4.13 billion by 2034, driven by increasing high-speed data needs, automation, aerospace, defense and advanced communication systems. 

Speaking during the fiscal second-quarter (Q2) earnings call, 3M CEO William Brown highlighted the importance of the company’s EBO technology. 

“Our connectors install faster, hold up far better to dust and handling, and help customers stand up AI capacity more quickly. We're rapidly scaling production capacity, both internally and externally, and engaging the broader ecosystem of suppliers, partners and customers to support standardization and industry adoption of EBO technology.”

- William Brown, CEO, 3M

Q2 Earnings Provide Further Momentum For 3M

On Tuesday, 3M stock clocked its best day in eight months after the company’s better-than-expected fiscal second-quarter (Q2) earnings. 3M’s $6.5 billion revenue with earnings of $2.40 surpassed the analysts’ consensus estimates of $6.4 billion and $1.98, respectively, according to Fiscal AI data. 

The company raised its 2026 adjusted EPS outlook to $8.80 to $8.95 from the previous range of $8.50 to $8.70. Brown said 3M is growing faster than the overall market because of stronger sales efforts, better customer retention and quicker innovation. 

“We're increasing the pace of innovation and are on track to nearly triple the number of new products introduced this year versus 3 years ago and launch more than 1,000 products by 2027, while reducing development cycle time by about 20%.”

Analyst Nigel Coe of Wolfe Research lifted his price target for 3M to $201 from $190 while maintaining an Outperform rating on the stock. Coe said the company delivered its strongest quarter for organic growth in nearly a decade, evoking confidence in its turnaround efforts and future expansion potential.

The analyst said 3M’s new products are helping improve its growth outlook. As more new offerings reach customers, the company could see stronger sales. Wolfe Research also believes 3M’s stock could gain more value if investors become confident that the company can deliver steady growth and continued business improvements. 

MMM Stock: Retail View 

On Stocktwits, retail sentiment around the stock remained in ‘bullish’ territory with over 500% surge in message volume over the last 24 hours. 

A user said, “3M’s Q2 update strengthens the turnaround case, with better sales growth, broader segment demand, margin discipline, and free cash flow conversion above 100%. The next test is whether growth can stay durable after pricing and order-timing benefits normalize.”

MMM stock has gained 6% year-to-date. 

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