Cramer tracks the tech boom as Washington stalls on key policy promises

As industrial stocks stall and the technology sector runs hot, Jim Cramer said it will be tempting to view the trend as a sign of the overall economy weakening.

"I think that would be a mistake. To me, the techs are roaring while the industrials languish because investors keep gravitating to the companies that will have the most upside in the second half [of 2017] now that it looks like the Trump steamroller has run out of gas," the "Mad Money" host said.

The stock market has always been forward-looking, trading on predictions of what might happen six to nine months down the line.

Before President Donald Trump came to somewhat of a standstill with Congress, banks and industrials topped the charts on expectations of repatriation, lower corporate taxes, and bountiful deregulation.

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"We're still getting deregulation in spades," Cramer said. On May 9, the president chose two candidates to serve on the Federal Energy Regulatory Commission who may speed the approval of oil and gas pipeline projects.

Trump has also put policymakers in place who favor consolidation in television, and many hope he will appoint people to the Justice Department who favor mergers in the telecom space.

"He's got Wilbur Ross as Commerce Secretary making deals with the Chinese that are very pro-agriculture interests, and he's looking into protecting the entire steel industry from cutthroat foreign competition by declaring it a national defense asset," Cramer said.

But corporate tax and health care reforms seem to have taken a backseat to the Comey-Russia uproar, and disagreement in Congress on how to implement the policies is not speeding the process.

The few winners in the market are tied to Chinese infrastructure projects. Chinese excavator sales were up by triple digits in April, and U.S. construction giants Caterpillar and Cummins are seeing their orders rise.

"All I can say is thank heavens for Communist China. We need a major infrastructure program, but our Republican-controlled Congress hates spending money, so our companies will just have to piggyback off the Chinese," Cramer said.

In fact, most of the market's winners are not tied to politics or hope brought about by the Trump administration.

For example, semiconductor play and Cramer-fave Nvidia has run up for four days straight after reporting earnings on May 9, boasts a sky-high valuation and shows no signs of slowing its run.

Nvidia's stock sells at 38 times earnings, far beyond where Facebook and Alphabet's stocks trade, and while it is no Amazon, its price-to-earnings multiple flies high above most of the software players.

"You only need to listen to the conference call to recognize that Jensen Huang, the CEO, isn't just tossing out the term 'artificial intelligence' like so many others. He's pioneering AI," Cramer said.

On the call, Huang insisted that "every single software developer has to learn deep learning. Every single software developer has to apply machine learning. Every single software developer will have to learn AI. Every single company will use AI. AI is the automation of automation."

To Cramer, statements like those speak volumes about Nvidia's business and the software sector at large.

"Those are strong words which suggest that all of the money going into software stocks should really be flowing into artificial intelligence stocks," he said. "There's just one problem. Nvidia is the only major artificial intelligence stock around."

Cramer acknowledged that Alphabet is a contender, but said its focus is stretched across numerous branches of business. Still, he said, its deal with Lyft to develop its self-driving car project, Waymo, is a notable development in the fast-growing autonomous car space.

And before investors give up on the entire retail sector and bow to Amazon, Cramer nodded to companies like Domino's that are using innovative methods to drive sales.

"Here's a company that's less a restaurant chain and more a technology play. They're constantly trying to come up with better ways for you to order online or via mobile. The big gating factor is how many pizzas they can deliver on a given evening, so you better believe driverless cars, the internet of things and GPS will really help the bottom line here," he said.

As long as the president and Congress continue their back-and-forth without passing concrete legislation, Cramer suggested looking for more secular plays to bolster your portfolio.

"Look for ancillary plays like FedEx or XPO Logistics for e-commerce delivery, Broadcom or Analog Devices — more chipmakers — [or] Lam Research [and] Applied Materials that make these chip machines that you need in order to put out the best semiconductors," he said. "And don't forget, the money managers buying these stocks all think that they're cheap on next year's numbers. They won't be dissuaded so easily by the need for near-term earnings. They want revenue growth, and these companies? They have it in spades."

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