Amazon.com Inc. (NASDAQ:AMZN) expanded its data center partnership with 3M Co. (NYSE:MMM) and received a warrant to buy about $521.4 million of 3M stock, with vesting tied to the hyperscaler’s purchases of data center products.

3M shares were up 5.43% in after-hours trading, and Amazon stock was trending as it rose 0.29%.

Vesting Tied to Data Center Purchases

85% of the warrant shares vest based on Amazon’s payments for optical connectivity and other data center products, with full vesting once cumulative payments reach $6 billion, 3M said in a filing to the Securities and Exchange Commission.

Full vesting occurs once cumulative payments reach $6 billion, with the remaining shares vesting upon achievement of event-based milestones.

Warrant Terms

3M issued a warrant to a wholly owned Amazon subsidiary covering up to 3.16 million shares at $164.89 each, exercisable over seven years.

Data Center Buildout Accelerates

U.S. hyperscalers could spend $916 billion on capital expenditures over the next 12 months, rising to nearly $1.2 trillion the following year, according to Apollo Global Management.

Data-center capital expenditure could reach roughly 3.1% of U.S. GDP in 2027, compared with a peak of 1.2% for telecom investment during the dot-com boom.

In July, 3M announced a strategic partnership with Microsoft Corp. to deploy its Expanded Beam Optical technology in Azure data centers. The technology is designed to improve fiber connections, making them faster to install and easier to maintain.

Price Action: On Monday, Amazon closed 4.98% higher at $262.45 and climbed 0.29% to $263.20 in after-hours trading. Meanwhile, 3M closed 1.66% lower at $162.01 and rose 5.43% to $170.80 in extended trading.

Benzinga Edge rankings indicate Amazon’s stock has a Momentum score in the 68th percentile and a Growth score in the 92nd percentile.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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