Micron Trades at Just 5 Times Forward Earnings. Here's Why the Market Doesn't Trust the Memory Supercycle Yet.

Micron Technology's stock price has soared more than 600% over the past year.

The company is boosting its manufacturing footprint in an effort to meet surging AI-driven demand.

Historically, the semiconductor industry undergoes boom and bust cycles.

Many tech stocks have soared in recent years thanks to the rise of artificial intelligence (AI). One is computer memory manufacturer Micron Technology (NASDAQ: MU) , whose shares skyrocketed over 600% in the past 12 months through the end of July.

Despite this amazing run, Micron's share price valuation looks cheap, given the stock's forward price-to-earnings ratio of about 5. That's around a low point for the past year.

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In addition, Micron shares are down from their 52-week high of $1,255 reached in June. This is rooted in market concerns that the memory supercycle has peaked, resulting in a stock sell-off. But has it, or will Micron continue to benefit from AI-driven demand? Here's a deeper look into the situation.

In Micron's earnings report for its fiscal third quarter ended May 28, CEO Sanjay Mehrotra noted that customer hunger for computer memory continues to outpace industry supply, stating, "We expect tight conditions to persist beyond calendar 2027 as a result of AI-driven demand across all segments coupled with structural supply constraints."