Micron Technology (MU) and SanDisk (SNDK) are expected to benefit from reports of tightening memory supply conditions, Morgan Stanley said in a Monday note.

"It seems most pronounced in DDR5 DRAM, where there is an active sense of crisis that product is not available at any price," the report said.

In other areas, such as consumer grade NAND, there is more of a sense that there will be a shortage, but less of a near term crisis, the note added.

"Nevertheless, we are seeing a generational tightness across all areas," the report said.

The note said near-term earnings momentum is expected to overshadow longer-dated capital spending and demand risks.

Morgan Stanley raised its price targets for Micron to $338 from $325 and for SanDisk to $273 from $263. It kept its overweight ratings for both stocks, with Micron as its top pick.

Shares of Micron were up over 7% in recent trading, and SanDisk was up about 12%.

Price: 223.11, Change: +15.74, Percent Change: +7.59