South Korea Proposes Tax on AI Firms, Impacting Micron
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
0mins
Should l Buy MU?
Source: Fool
- Government Tax Concerns: South Korea's chief of staff, Kim Yong-beom, proposed a special tax on AI companies via Facebook to fund a 'national dividend,' raising concerns about Micron Technology's future profitability and causing its stock to drop by 3.8%.
- Increased Market Competition: Micron faces not only pressure from competitors trying to capture market share with lower prices due to high profit margins but also the risk of governments seeking to tax its profits, further squeezing its margins.
- Policy Risk Emergence: Although the proposal is not yet official policy, it highlights the potential global risk of taxing AI companies, with investors worried that similar policies could emerge in other countries where Micron operates.
- Investor Sentiment Deterioration: Despite Micron not having manufacturing facilities in Korea, investor concerns persist, especially with the possibility of similar tax proposals arising in markets like China and the U.S., which could impact the company's future profitability.
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Analyst Views on MU
Wall Street analysts forecast MU stock price to fall
26 Analyst Rating
24 Buy
2 Hold
0 Sell
Strong Buy
Current: 803.630
Low
235.00
Averages
336.12
High
500.00
Current: 803.630
Low
235.00
Averages
336.12
High
500.00
About MU
Micron Technology, Inc. provides memory and storage solutions. The Company delivers a portfolio of high-performance dynamic random-access memory (DRAM), NAND, and NOR memory and storage products through its Micron and Crucial brands. The Company's products enable advancing in artificial intelligence (AI) and compute-intensive applications. Its segments include Cloud Memory Business Unit (CMBU), Core Data Center Business Unit (CDBU), Mobile and Client Business Unit (MCBU) and Automotive and Embedded Business Unit (AEBU). CMBU is focused on memory solutions for large hyperscale cloud customers, and high bandwidth memory (HBM) for all data center customers. CDBU is focused on memory solutions for mid-tier cloud, enterprise, and OEM data center customers and storage solutions for all data center customers. MCBU is focused on memory and storage solutions for mobile and client segments. AEBU is focused on memory and storage solutions for the automotive, industrial, and consumer segments.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Valuation Metrics: Micron's trailing P/E ratio has risen to about 35, significantly above the five-year average of 28.5; however, its forward P/E stands at just 7.6, indicating it may still be undervalued.
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- Strong Market Demand: With tech companies planning to collectively invest $750 billion in AI infrastructure in 2023, the tight supply of memory and storage components has allowed these companies to raise prices and secure higher profits.
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See More
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- Impact of Product Diversity: As a diversified supplier with DRAM, NAND, and high-bandwidth memory (HBM), Micron is better positioned to withstand market volatility compared to Sandisk, which focuses solely on NAND, suggesting Micron may perform better during future downturns.
- Manufacturing Capability Advantage: Micron, as an integrated device manufacturer (IDM), owns its chip fabrication facilities and is investing $100 billion in a
See More
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- Boeing Order Potential: China is considering a deal for approximately 500 Boeing 737 Max aircraft, with Boeing's CEO suggesting that this visit could present a significant opportunity, and analysts predict an order announcement, although the impact on income may take time to materialize.
- Agriculture and Rare Earth Impact: A Chinese commitment to purchase US agricultural products could boost stocks like Deere and Corteva, while an agreement on rare earth flows may pose risks for MP Materials, highlighting the far-reaching implications of US-China negotiations across multiple sectors.
See More
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- Technological Innovation: Recently, Applied Materials introduced two new chipmaking tools designed for atomic-level precision and has expanded collaborations with partners such as TSMC and Micron, further solidifying its competitive position in the high-end semiconductor equipment market.
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