'RealMoney' Radio Recap: That's Entertainment

There's a lesson to be learned from the late 1970s, Jim Cramer told his "RealMoney" radio show listeners, and that's the lesson of the computer cycle.

In 1979, a program was developed to enable data to be put into a spreadsheet, and businesses saw that buying a computer with the spreadsheet program would make life much more efficient, Cramer said. As computers developed and innovations were introduced, they soon hit the consumer market and everyone needed a PC.

But that market cycle has run its course, he said. Now, we're in the early stages of an entertainment-driven technology cycle.

Best Buy(BBY Quote), long a popular "best-of-breed" big-box retailer, attributed its fourth-quarter double-digit profit growth to audio-visual equipment sales, including big-screen televisions and MP3 players.

People want to be entertained and that is where the growth will be, Cramer said. New products drive a cycle, and while there's nothing new on the PC horizon, there's a lot new in entertainment, he said.

New games coming out for Microsoft's(MSFT Quote) Xbox 360 feature some of the most convincing graphics Cramer has ever seen, and he believes there will be more demand for lifelike games.

He doesn't care about the software, focusing instead on the hardware inside that makes the games exciting. In this space, he likes Nvidia(NVDA Quote) and ATI Technologies(ATYT Quote).

These stocks have been hot, so he would only buy them after they came down a bit. And he wouldn't put his whole position on at once, he added, since there's a big multiyear cycle ahead of us.

He also likes cell phones because they continue to roll out with products and features that cater to consumers who want entertainment, including the ability to send short videos and better ring tones.

Nokia(NOK Quote) and Motorola(MOT Quote) are cheap stocks that Cramer likes. He also mentioned Skyworks Solutions(SWKS Quote) because it makes chips in these cell phones, as well as Qualcomm(QCOM Quote), which he owns for his ActionAlerts PLUS charitable trust portfolio.