Micron Technology (NASDAQ: MU) Plummets 3.91% as AI Tax Fears Trigger Chip Sector Selloff

Micron Technology (NASDAQ: MU) declined 3.91% to $764.22 on Tuesday, May 12, 2026, extending losses across the semiconductor sector as investor sentiment turned sharply negative on AI taxation concerns. The selloff erased roughly $31 billion in market value from the memory chipmaker as the broader tech rally reversed course.

By the Numbers

• Stock price fell to $764.22 from $795.33 at prior close, marking a $31.11 drop
• Market capitalization stands at approximately $858 billion based on current pricing
• Trailing price-to-earnings ratio: 35.95x; forward P/E: 7.47x
• Earnings growth (TTM): 7.56% year-over-year

What's Behind the Move

Micron's sharp decline followed the mere mention of a potential AI windfall tax, which triggered a cascading selloff across semiconductor equities. Reports indicated the tax proposal concept alone spooked investors into abandoning chip stocks broadly, with Micron particularly vulnerable given its elevated trailing valuation and exposure to data center demand.

The sector's fragility reflects underlying concerns about the sustainability of the AI-driven chip rally. Despite Micron's strong earnings growth of 7.56% year-over-year and a forward P/E ratio of just 7.47x—suggesting relative value—investors fled to safer ground amid political and regulatory uncertainty. The reversal from record highs in the Nasdaq indicated broader market hesitation about the concentration of gains in technology equities.

Investor Takeaway

Micron's sharp 3.91% decline on Tuesday highlights the vulnerability of semiconductor stocks to sentiment shifts and regulatory headlines, despite strong fundamentals. The wide gap between trailing P/E (35.95x) and forward P/E (7.47x) suggests the market is pricing in significant earnings deceleration ahead. Investors should monitor not only tax policy developments but also memory chip cycle dynamics and customer guidance, as Micron's profitability hinges on both demand and commodity pricing power.