3M (MMM) Teams Up With Microsoft As Its Undervalued Narrative Faces A Valuation Test

3M (MMM) has drawn fresh attention after announcing a partnership with Microsoft that links its Expanded Beam Optical technology to Azure data centers and brings Microsoft AI tools into 3M's own operations. See our latest analysis for 3M. Recent events around AI and data centers have coincided with 3M's share price moving to $161.77, with a 7 day share price return of 4.14% and a 90 day share price return of 4.67%. Its 3 year total shareholder return is very large, and its 5 year total...

Find winning stocks in any market cycle. Join 7 million investors using Simply Wall St's investing ideas for FREE. 3M (MMM) has drawn fresh attention after announcing a partnership with Microsoft that links its Expanded Beam Optical technology to Azure data centers and brings Microsoft AI tools into 3M's own operations.

Recent events around AI and data centers have coincided with 3M's share price moving to $161.77, with a 7 day share price return of 4.14% and a 90 day share price return of 4.67%. Its 3 year total shareholder return is very large, and its 5 year total shareholder return of 16.17% points to momentum that has been stronger over the medium term than in the very near term. If this AI partnership has you thinking about where else future infrastructure demand might show up in equity markets, it could be worth scanning for other potential beneficiaries using our AI infrastructure stocks screener, starting with 53 AI infrastructure stocks.

After the recent AI driven jump in 3M, the stock still trades below both internal fair value estimates and analyst targets. Is that a sign the market is too cautious on litigation and transformation risk, or not cautious enough? Most Popular Narrative: 5.4% Undervalued With 3M shares at $161.77 versus a narrative fair value of about $170.97, the most widely followed storyline frames the stock as modestly undervalued, hinging on execution in margins and legal clean up.

Significant operational efficiency gains, such as improved on-time delivery, increased equipment effectiveness, quality cost reductions, and supply chain/process consolidation, are driving structurally higher operating margins and earnings benefits that are expected to compound as further optimization and automation are rolled out company-wide. Curious what kind of margin uplift and earnings trajectory would need to back that valuation gap for 3M? The narrative focuses on improving profitability, disciplined pricing, and a future earnings multiple that assumes those plans remain in place.

The full breakdown lays out how revenue, margins, and valuation all connect in that story. Result: Fair Value of $170.97 (UNDERVALUED) However, 3M's PFAS litigation exposure and questions around reigniting revenue growth still sit in the background and could challenge that undervalued storyline.