The Dow posted its 9th consecutive day of gains, marking its longest win streak since 2017, and Jim Cramer is eyeing all the action that helped stocks move higher in today's trading. Then, SAP CEO Christian Klein checks in to discuss how the company is helping its enterprise customers and the state of enterprise software spending. Next, how should investors approach big tech ahead of a major shift to the Nasdaq 100 next week? Cramer's taking a closer look at the upcoming rebalancing of the index to see how it'll impact stocks. Plus, Cramer opines on more of the biggest cloud comeback names.

Mad Money Disclaimer

There's investing news that impacts your money and your portfolio.

And there's business news that impacts your life.

From Wall Street to K Street and Main Street, The markets may close, your money never stops.

Last Call is really about spotting tomorrow's opportunities tonight.

Follow and listen to CNBC's Last Call on your favorite podcast platform today.

I'm here to level the playing field for all investors.

There's always a homework in summer and I promise to help you find it.

Everyone, my friends, I'm just trying to save you some money.

My job is not just to entertain, but it's also to educate and teach you.

So call me at 1-800-743-CNBC or tweet me at Jim Kramer.

Hey, that's my takeaway from today's action, where the Dow actually jumped 164 points, while the S&P dropped 0.68%, and the Nasdaq plunged

Everybody said They wanted the market to broaden out.

For many months now, this market's been led by tech.

Specifically, the Magnificent 7, Alphabet, Amazon, Apple, MetaPlatforms, Microsoft, Tesla, and the new kid on the trillion dollar block, Nvidia.

But today, today we saw how things look when these stocks get hammered.

And the money rotates away from tech to other parts of the market.

If you own nothing but tech, today was simply a terrible day.

But if you own a diversified portfolio, well, you know what?

We've got giant moves in the ones for loan banks, the retailers, the beaten down health care stocks, even the transports utilities.

Tonight, I'm going to go over the names that I think can keep winning, even if the market doesn't broaden out.

First, though, let me start with what triggered the bloodletting that freed so much money from the longer-term winners.

First, last night Netflix reported a series of terrific subscriber gains, but it gave you a tepid outlook.

Most of the conference call was about how their password cracking down has been working.

The ultimate growth stock seemed to have hit a wall.

Tesla also reported an investor's collective vote with their feet.

Because Elon Musk seemed willing to spend huge amounts of money on uncertain projects like self-driving cars.

I think the sellers are wrong to doubt him.

Finally, the biggest maker of semiconductors, a company called Taiwan Semi, reported a disappointing set of numbers and also talked out demand for pretty much everything from classic semiconductors, semiconductor capital equipment, phone and PC makers.

They even questioned the quote frenzy for artificial intelligence, which has been the most important spur to the years tech rally.

Now you know many of these stocks trade together and they get hammered together.

But if you own a diversified portfolio, including many beaten down stocks for 2023, stocks that represent great value now, you crushed it.

Many people now believe that at last the bulls embracing the rest of the market.

Something that only does have to happen if this market is ever going to get to the healthy breath that needs to charge still higher.

Even as I am comfortable with market that is narrow leadership never bothered me as long as those leaders are terrific companies that is that is.

I even I'm getting a little nauseated seeing the same handful of stocks go up every day on no information and it has led to a remarkably overbought stock market, which you know I think is suboptimal.

Companies that could be doing tremendously if we aren't heading to recession.

It just doesn't look like we're going to.

These rotations of these stocks make sense and they embrace some very inexpensive sectors.

Specifically the ones that can keep winning because I care about the future more than the past.

The Chabot Trust owns a couple of drug stocks of which only Eli Lilly has produced much of a win thanks to its amazing diabetes slash weight loss drug Mungero.

I wouldn't be surprised if this Mungero doesn't become the best selling drug of all time given the scale of the obesity epidemic.

But today we saw 2 new health care stocks crack into the big time win column.

J&J put up good pharma numbers and great medtech numbers.

Plus it announced an exchange program with subsidiary Canview that could amount to 1 of the biggest buybacks in the company's history and maybe just maybe allow investors to ignore the talc asbestos litigation is but a huge damper on the stock.

We also got tremendous numbers from one-time market darling Abbott Labs, the best of the best in the medical device space that has been experiencing 1 of the worst COVID hangovers I've ever seen.

Today reminded me of the old Abbott, a company with the best devices and an amazing baby formula franchise.

I think both health care stocks can go higher.

Oh boy, it's time to recognize that these stocks have been overly punished.

Can't ignore them, especially if the regularly scheduled recession has been canceled.

It's JP Morgan, which is America's most dominant bank.

Wells Fargo, Bank of America, both put up terrific numbers, as well as Morgan Stanley, fantastic numbers.

And even Goldman Sachs, not great numbers, good future.

And by the way, Goldman was talking about if the IPO and M&A markets come back That's going to roar I agree Most of retails been left for dead Even as these companies are for the most part excellent performers in a world where the Fed might be almost done raising interest rates.

Hard to find a stock that's beating down right at its target with its 3.3 percent yield.

Walmart and Costco stocks have been doing better but it looks like they're really going to break out here.

You know what here's 1 for you for you I think you ought to think about it.

Sempra, it's an energy infrastructure company in the Southwest.

It makes so much sense here, especially with 3.2% yield.

You might want to consider PG&E, the incredibly well-run California utility has been rallying as it cleans up the mess of fires that bankrupted the company a trust representing the victims of those fires is now 1 of the company's largest shareholders, and they're selling down their position.

And I think it's awfully difficult to beat.

Yes, 1 that we've featured forever in the show American Electric Power.

It's really really cheap and it's down almost 20 points from its high.

We even got a rally in the stall transports.

The company created by the merger of Canadian Pacific and Kansas City Southern, putting together the greatest North American railroad.

Now, we don't know the staying power of this move will be a minor according to Symphony led by the 40 percent of the market.

And we're going to return to Magnificent 7 next week?

I think there's more to this rotation than that.

Bottom line tech won't be forsaken, but it's not going to come back immediately.

It's just I'd say maybe give it a week, but the admission of the other stocks, the Brethren, the Bull is excellent news for the market.

I've held Home Depot in my bank account and my stock account for 21 years.

And I've been rolling over my dividends the whole time.

And I'm thinking is there any way I can find out how how much I've made.

Well that would be something you have to calculate yourself.

I care more about how much you could make that how much made.

I think Home Depot is a darn good stock, but I'm going to throw in another.

People like them Florida Corp, by the way, but that's a little too speculative for me.

How about Jeff, my home state of New Jersey?

I've been watching this stock for about 6, 8 months.

Paramount is worth about 30 billion in assets and it trades 1 third of that.

No, you are very much in reality when it comes to the stock.

We also care about the other side, the bonds, the financial, the leverage, the debt.

And that's why I can't recommend the stock.

Hey, let's take my home state, John in New Jersey, John.

A shout out to you, my buddy Joe Clacko, all favorite guys, they had 3 birthdays.

SOUN, look, I like the product, but that doesn't mean I like the stock.

I like the product so much I don't want to own the company.

The admission of other stocks to the brethren of the Bulls is palpable and excellent.

Oh man, tonight we're wrapping up our clown comeback series by looking at the third tier winners, 1 of which I'm a real big fan of.

Then tomorrow after the close we're getting a mid year rebalancing the NASA 100.

I'm sending you up to the big event and it may have influenced today's pricing.

And SAP reported earlier in the day it was a few months before all the results.

Let's dig in deeper with the company's top brass.

Send Jim an email to madmoneyatcnbc.com or give us a call at 1-800-743-CNBC.

From Wall Street to K Street and Main Street, the markets may Close, your money never stops.

All week I've been taking you through the biggest winners in the best performing group of the year, the cloud software space, because everybody's so focused on the Magnificent 7 that they wind up ignoring these much larger moves.

Now, we've already highlighted the 8 enterprise software stocks with the most impressive gains since the bottom, searching for names that can keep winning, even if the markets order for tech certainly did cool a bit today.

Tonight, I'll take you through the ninth through 12th best cloud comeback names as of last night's close.

And that's Cloudflare, Bill Holdings, Adobe, and Zscaler.

Cloudflare is a content delivery network that's an essential part of the infrastructure of the Internet and also has a good cyber security kicker.

During the panic, this was 1 of the hottest stocks on the planet.

percent from its lows in March 2020 to its highs in November 2021.

Now the stocks bounced 80% for that low, although it's still down 70% from its all time high.

By the way, Cloudflare plunged from 60 to 40 in May after pretty, it was a great first quarter because management had some cautious commentary on the economy.

So we brought CEO Matthew Prince in on the show a week later and he explained that demand's still solid, It's just taking longer to close big deals.

In part, it's the same pivot to profitability soft in the other cloud comeback plays.

These guys have been turning a profit for nearly 2 years now, but they actually doubled their full year earnings forecast when they reported first quarter earnings.

More important, Cloudflare became free cash flow positive in the past 2 quarters.

I couldn't believe the stock got hit so hard.

Of course, these numbers are still very small, whether you use the earnings or cash flow estimates out a couple of years.

The stock is, some people would say, insanely expensive.

People justify paying up because Cloudflare is seen as an essential platform by its customers.

And they're expected to deliver 31 percent revenue growth this year.

Why not wait to find out if you haven't bought it yet?

OK, it's a digital payments play focused on small, medium sized business.

The company now offers a broader suite of software tools that help these smaller outfits automate their back office financial operations.

Builds up roughly 89% from its lows, although it's still down more than 60% from its peak at the end of 2021.

Now I'm intrigued by this, what because Bill holding gave us much more abrupt pivot to profitability this year.

After losing money in 2021 and 2022 fiscal years, they're likely to earn an astounding $1.45 per share in their 2023 fiscal year, which actually just ended last month.

We're going to find out for sure in August.

Their free cash flow is also expected to turn positive for the first time.

That said, I admit that I've been reluctant to pound the table on Bill because I'm simply not sure how necessary their platform is and I've had a hard look at it as a small business person.

I'm sure it's good, but is it better than what businesses can get from, say, Workday or 1 of the payroll processors or Intuit or maybe even their bank?

Now, I'm much more confident about the 11th best performing cloud comeback play.

It's called Adobe up 88 percent from where it bottomed last September and only down about 26 percent from its 2021 high.

Now, I've liked Adobe ever since the transition to a subscription business model was over a decade ago.

That's why I was 1 of our original cloud kings.

That said, I got even more positive on this in March when I spoke to Shantanu Narayan, he's the CEO, and realized that Adobe could benefit enormously right now from the mainstreaming of artificial intelligence,

Back then they launched a product called Firefly.

You can think of it as a generative AI tool for all sorts of creative projects.

It'll edit your photos or videos or sound clips with simple English language commands.

Something that can save companies a fortune on labor costs and time, or at least make their existing designers way more productive, which is how it's being used.

Mostly right now, the only success of Firefly helped Adobe shoot the lights out when reported this Tremendous numbers last month.

By the way, the stocks of 55% since we brought in a riot on this show back in March.

Adobe is a mature company with profits galore.

Even now, the stock sells for 33 times this year's earnings estimates, which is reasonable given the growth potential.

That's important because this cloud software bull market falls apart.

I expect Adobe to be 1 of the most resilient stocks in the group, just like it was last year.

These guys may be top 5 in terms of gender of AI right now in my book.

Cyber security outfit with a stock that's up 74% from where it bottomed and it bottomed less than 3 months ago.

Remember there was a disparate sell off in the cyber stocks this spring after 1 of the worst run players brought the whole group down with some bad numbers.

But the better operators were doing terrifically, including Zscaler, which preannounced a far better than expected quarter in May.

It's even got more of a boost following its bullish investor day last month.

Now, I spoke with Zscaler CEO Jay Chaudhry about a week after that and I thought he told a pretty good story.

Now Zscaler's had positive earnings and positive cash flow for years, but they did pivot to become more profitable this year.

Companies expect to earn $1.46 per share in the current fiscal year, which ends this month.

Okay, that said, I feel more cautious on Zscaler for a particular thing that's happened.

See, this company just got hit, I think, although people don't seem to realize it, by a big change at Microsoft.

Microsoft just announced they're moving into a huge chunk of the cybersecurity market.

Now, I spoke to Nikesh Arora, he's the CEO of Palo Alto Networks, a charitable trust named last Thursday, and he sounded pretty confident.

Cybersecurity is a huge space and Microsoft likely won't be able to crush most competitors.

However, Zscaler is a little different because Microsoft's a huge sales partner to Zscaler.

So as Microsoft rolls out its increasingly comprehensive cybersecurity platform, Zscaler is likely to be the hardest hit.

They go from being friends to being, okay, not friends.

Well, I'm sure Jay will have a good story, but I'm worried that Microsoft is going to come at them.

It doesn't help, of course, that this thing sells at 100 times earnings.

Look, the stock's up 74% in 2 and a half months.

Take some profits and go buy yourself a sweater with them, as my mom used to say when we'd hit big at the casino.

Of the 4 cloud software winners I mentioned tonight, I think Adobe's the safest by far, while Cloudflare's an excellent company.

I'm a little nervous about the nosebleed valuation.

Bill Holdings has done very well, not convinced it's essential.

And as for Zscaler, this longtime Kramer fave, where the biggest partner of Microsoft suddenly turned into a competitor?

But the bottom line, when you go through this whole newly red hot cloud cohort, of course, until today, nearly every 1 of them is doing much better on the profitability front than they were doing a year ago.

This industry has changed dramatically, changed for the better in the last 12 months.

And so do not be surprised if some of these cloud winners can keep working their way higher, even if the Nasdaq suddenly faces some pretty tough weather over the next 4 or 5 days, as I expected to have.

Coming up the magnificent 7 mosied into town and now the saloon needs renovations Kramer breaks down the Nasdaq 100 is rebalancing act next.

Today's news can feel like uncharted waters, but more often than you think, we're not the first generation to confront what we're dealing with today.

We're just the first generation to make a podcast about it.

Each week, we'll bring you a story from history.

That helps with something in the headlines today.

Rachel Maddow presents Deja News with Isaac Davy Aronson, an MSNBC podcast.

Search for Deja News wherever you're listening and follow.

This is a really hard story to understand, but I got to give it to you because it really impacted what you saw today on the screen.

See tomorrow night after the close, something big is going to happen to the NASDAQ 100 and it's not a good thing and it's a big reason for the use text sell off today, although not as big as the widely panned numbers from Tesla and Netflix.

I'm talking about the NASDAQ 100 index earthshaking midyear rebalance that was announced a few weeks ago.

I figured it out with the help of some others.

I don't want you to be unprepared for the reverberations from these adjustments, So tonight we're going to go over exactly what's happening, what the impact might be, and how you can try to profit from it, or at least avoid getting hurt.

Because this rebalance has everything to do with the mechanics of the market and absolutely Nothing to do with the fundamentals of the stocks.

So therefore, we're going off the charts to learn more.

And we're doing it with the help of Mark Sebastian.

He spends a lot of time talking about the VIX, but he really understands the mechanics of this kind of situation.

First, let's take a page from Dragnet, as in just the facts, man.

Nearly 2 weeks ago, Nasdaq announced a special rebalance for the Nasdaq

index made from the hundred largest Non-financial stocks in the Nasdaq composite their goal.

They want to reduce over concentration in the index See they feel like it's hostage to a small number of mega cap stocks with extremely heavy weightings.

And you're going to recognize these names.

Yeah, we're talking about them gunning for the magnificent 7.

Apple, Microsoft, Alphabet, Amazon, Nvidia, MetaPlatforms, and Tesla.

Now collectively account for more than 55% of the NASDAQ 100 composite.

It has only happened because the companies are so good and their stocks have created so much value.

In fact, just Apple and Microsoft add up to nearly a quarter of the Nasdaq 100.

That's not representative of the entire 100 stocks.

After tomorrow's rebalance, The Magnificent 7 should collectively account for more like 44% of the Nasdaq 100, at least according to David Koston.

We don't know exactly what the new weightings will look like, but we've got a general idea of what they're trying to do.

These waiting changes will officially take effect Monday, but according to Mark Sebastian, the trading to account for these changes will likely take place tomorrow night just after the close within only an hour or so he expects billions of dollars with the shares in the Magnificent 7 will be for sold.

And a lot of the selling you saw today was to get ahead of tomorrow's selling.

Well, by Sebastian's math, Close to 300 billion is pegged to the Nasdaq 100 index, though various mutual funds and ETFs.

Now, look, the lion's share of that, you probably know, is the Invesco QQQ Series 1 ETF, and that's known by its ticker QQQ, which has a $209 billion market cap.

There are a bunch of less prominent mutual funds and ETFs that track the index to like Fidelity's victory NASDAQ 100 index.

And Sebastian likes 300 billion as the rough estimate.

Using the roughly 300 billion dollar estimate and the new weighting estimates from Goldman Sachs, that works out to more than $35 billion of forced selling in an instant tomorrow night.

See all Mad Money w/ Jim Cramer transcripts on Applepodcasts

SAP CEO, Breaking Down The Nasdaq Rebalance & Cloud Comebacks 7/20/23