The name Muhammad (ﷺ) was given to the Prophet by his mother and grandfather.
The following are two traditions from the seerah by Ibn Kathir, about the reason behind the name:
وقال محمد بن إسحاق : فكانت آمنة بنت وهب أم رسول الله صلى الله عليه وسلم تحدث أنها أتيت حين حملت برسول الله صلى الله عليه وسلم فقيل لها : إنك قد حملت بسيد هذه الأمة فإذا وقع إلى الأرض فقولي : أعيذه بالواحد من شر كل حاسد في كل بر عامد ، وكل عبد رائد ، نزول غير ذائد ، فإنه عبد الحميد الماجد حتى أراه قد أتى المشاهد . وآية ذلك أنه يخرج معه نور يملأ قصور بصرى من أرض الشام فإذا وقع فسميه محمدا فإن اسمه في التوراة أحمد يحمده أهل السماء وأهل الأرض ، واسمه في الإنجيل أحمد يحمده أهل السماء وأهل الأرض ، واسمه في القرآن محمد
Muhammad b. Ishaq stated that Amina, daughter of Wahb and mother of the
Messenger of God (SAAS), used to say that when she became pregnant with the
Messenger of God (SAAS), a voice told her:
"You are pregnant with the lord of this nation; when he drops to the ground (in birth) say the words, 'I invoke for him the protection of the One God, from the evil of all who envy, from everyone committed to his oath and every prowling slave; may a champion protect me, for he is with the All-praised and All-glorious One, until I see him come into view.
And the proof of that is a light accompanying him that will fill the castles of Busa in Syria. And at his birth, then call him Muhammad, for in the Torah his name is "Ahmad" and the hosts of earth and heaven give him hamd, praise. In the Gospels his name is "Ahmad", the hosts of heaven and earth giving him
hamd, praise. And his name in the Qur'an is "Muhammad", "The praised
one."
— The Beginning and the End ( البداية والنهاية ) by Ibn Kathir [English translation]
فلما كان اليوم السابع ذبح عنه ، ودعا له قريشا فلما أكلوا قالوا : يا عبد المطلب أرأيت ابنك هذا الذي أكرمتنا على وجهه ما سميته ؟ قال : سميته محمدا . قالوا : فلم رغبت به عن أسماء أهل بيته ؟ قال : أردت أن يحمده الله في السماء ، وخلقه في الأرض . قال أهل اللغة : كل جامع لصفات الخير يسمى محمدا كما قال بعضهم
إليك - أبيت اللعن - أعملت ناقتي إلى الماجد القرم الكريم المحمد
وقال بعض العلماء : ألهمهم الله عز وجل أن سموه محمدا لما فيه من الصفات الحميدة ليلتقي الاسم والفعل ، ويتطابق الاسم والمسمى في الصورة والمعنى
On the seventh day he made sacrifice for him and invited Quraysh to see him.
When they had feasted, they asked, "O Abd al-Mutalib, what have you
thought of naming this son of yours you have honoured?" "I have named him
Muhammad," he replied. "Why", they asked, "have you preferred him not to
have one of the names of his kinsfolk?" "Because I wanted God to praise him in
heaven and His creatures to praise him on earth," he replied.
Language scholars say, "All that invites the qualities of good is named
'Muhammad'." As the poet said: To you, blameless as you are, I have urged on my mount, to him who is the glorious and noble master, the one 'Muhammad' (i.e. "the laudable one").
Some scholars say that God, the Almighty and Glorious, encouraged them to
name him Muhammad for the praiseworthy qualities he possessed; so that word
and deed be joined and that the name and the one named be appropriately congruent in form and concept.
— The Beginning and the End ( البداية والنهاية ) by Ibn Kathir [English translation]
But the 'praiseworthy' meaning would not be correct since all praise belongs to Allah.
, there is a difference here we all praise to Allah being a creator/sustainer/god, but praising prophet is being a prophet/the guider to the whole ummah.