As South Korea Walks Back Its AI Tax Proposal, the Brief Selloff in MU Stock Is a Non-Event

Micron Technology Inc. (MU) is a global leader in advanced semiconductor solutions, specializing in DRAM and NAND memory storage systems. The company has, over time, transitioned from being a traditional PC component supplier to an infrastructure keystone in this artificial intelligence era. Micron’s hardware serves as the essential high-speed memory backbone that is currently powering the global data centers, generative AI platforms, and autonomous vehicles.

Founded in 1978, the company is based in Boise, Idaho. The company operates fabrication facilities in the United States and Asia.

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Micron Stock Rallies

Micron stock holds a market cap of $890 billion, driven by unprecedented demand. The stock has orchestrated a historic rally, surging from its 52-week low of $90.93 set in May last year to its peak of $818.67, set this Monday. This massive run reflects Wall Street’s re-rating of Micron from a hardware manufacturer to a structural secular growth story.

Compared to the illustrious S&P 500 Information Technology index ($SRIT), Micron has outperformed heavily over the last 12 months. While the tech-heavy index delivered solid double-digit growth numbers, Micron simply outperformed the index with a staggering 700% growth rate. The stock continues its strong performance with a 20% surge in a week and 88% in a month, showing no signs of a slowdown.

Micron Reported Record Results

Micron Technology released its second-quarter 2026 results in March, setting records across all major metrics. Revenue surged 196% YoY to $23.86 billion, easily topping analyst estimates, while non-GAAP earnings came to $12.20 per share, crushing consensus estimates of $8.60.

This rapid expansion was anchored by the Cloud Memory division’s $7.75 billion in revenue, along with the doubling of data center NAND revenue. Micron’s non-GAAP gross margin for the quarter improved drastically to 74.9%, generating adjusted free cash flow of $6.9 billion.

For its third-quarter 2026, management has provided a healthy outlook forecasting revenue of $33.5 billion along with a gross margin at 81% while diluted earnings are expected at $18.90 per share. Reflecting structural confidence, the board has also authorized a 30% hike in its quarterly dividend.

Micron Slips on AI Tax Scare

Micron shares slipped 2.3% recently as part of a wider $300 billion semiconductor selloff caused by a South Korean political proposal. Markets reacted to policy chief Kim Yong-beom’s idea of a “citizen dividend” funded by taxing corporate AI profits. Although the proposal targets domestic giants such as Samsung and SK Hynix, the proposal rippled fears of a global regulatory tax wave targeting key AI beneficiaries, dragging down U.S. chip stocks.

Long-term, this geopolitical noise is highly unlikely to impact Micron’s structural growth course. The South Korean government quickly stepped back, clarifying that the remarks made were a personal opinion and would tap generic “excess tax revenue” rather than corporate profits.

Analysts dismissed the dip as reactive and as an overreaction, focusing instead on structural supply deficits extending well into 2027. Backed by strong demand for data centers, Micron’s pricing power over its premium high-bandwidth memory ensures its long-term stability remains intact.

Should You Buy MU?

The recent South Korean tax scare is largely considered a non-event, providing investors with an opportunity to buy the dip following a strategic entry point. The stock holds a consensus “Strong Buy” rating among analysts, supported by 31 “Strong Buy” and five “Moderate Buy” ratings from a total of 41 reports. However, investors should also note that the stock trades above its mean price target of $591.77, implying a downside potential of 27% from its current market price.

While the long-term AI thesis remains solid for Micron, the gap between the market price and analyst ratings suggests a period of consolidation may be ahead for the stock.

On the date of publication, Ruchi Gupta did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com