Shares of Micron Technology (NASDAQ: MU) have soared over the past year as memory shortages fueled explosive growth in revenue and profits. With the stock up by more than 700%, the company's market cap recently crossed $1 trillion, yet the stock still trades at a cheap-looking valuation of about 7 times next year's consensus earnings estimate.

That valuation sits well below Nvidia's roughly 18 forward price-to-earnings (P/E) multiple. So why the discount on Micron -- and is it warranted?

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Investors are cautious despite booming demand

In its fiscal 2026 third quarter, Micron delivered a 346% year-over-year revenue jump, and analysts expect a similar increase in fiscal Q4. But investors aren't ready to start ignoring the memory market's boom-and-bust history.

Over the past 10 years, Micron has at times seen its revenue drop by as much as 50% in a single year. That matches the occasional downward swings in memory chip selling prices. That type of volatility explains why investors tend to pay a low multiple for the stock even during good times -- because they expect the next memory market downturn will eventually arrive.

Trailing-12-month earnings have hit a record $44 per share and just doubled year over year in the most recent quarter. But Micron's results were choppy before fiscal 2025. From fiscal 2017 through fiscal 2025, earnings rose 72% in total, which isn't much over eight years.

The current memory boom might last for another year or two. On the June earnings call, management said it has no clear line of sight for when memory supply will fully catch up to demand. This statement supports expectations for higher prices and profit growth in the near term.

The question is what happens after 2028. That's when the gap between supply and demand is expected to shrink as Micron and its competitors gradually bring expanded manufacturing capacity online. SK Hynix expects to add some production capacity as early as next year, which keeps investors cautious about how long memory prices can stay this elevated as supply catches up to demand.

The market rewards consistency

Nvidia faces a similar cyclical risk, but it's more tied to the broader semiconductor industry's demand cycles. The market is willing to award the GPU leader a higher forward earnings multiple because its business typically doesn't experience the same extreme degree of cyclicality that Micron faces.