Jim Cramer says this is how to play a market rotation — and one stock he’d buy

CNBC's Jim Cramer said investors navigating Monday's volatile market should use sharp pullbacks as buying opportunities rather than chasing short-lived rallies.

"You go to your machine that you use for stocks," the "Mad Money" host said. "You query it for the top ten largest losers in the S&P 500. If you like any of them...then [buy, buy, buy]."

The three major indexes ended Monday mixed as investors rotated back into software names while many AI hardware and data-center stocks sold off. Beaten-up software vendors Salesforce and ServiceNow climbed roughly 3.4% and 8.8%, respectively. Meanwhile, chip giant Nvidia fell 1.3%. Cramer's Charitable Trust, the portfolio used by the CNBC Investing Club, owns Salesforce and Nvidia shares.

The persistent back-and-forth between software and hardware underscores a market with little conviction, Cramer said.

"Sometimes we buy hardware stocks and the goods that go into and help build data centers, like semiconductors and semiconductor equipment, while we sell all kinds of software stocks," he said. "Sometimes, we sell hardware stocks and buy those same software stocks we threw away."

Rather than trying to time those rotations, Cramer said investors should focus on identifying high-quality stocks they have been waiting to buy and use weakness to gradually build positions.

For Cramer, one standout opportunity emerging from Monday's selloff was Micron, which fell 6% Monday. Micron and other memory stocks came under pressure following comments from Seagate's chief executive about the pace of building new capacity.

While many of the market's biggest decliners Monday were tied to the data-center trade, Cramer said several still looked too expensive or overheated to buy. Micron, however, stood out to Cramer because of its more reasonable valuation and role in the AI buildout.

"Micron sells for less than 12 times earnings," he said. "This may be the opportunity."

Still, Cramer cautioned against buying all at once and instead recommended scaling into positions gradually.

"I'd buy some right here and then wait for another 2-3% percent decline to buy more," he said. "I just showed you how to use a rotation to buy something, not aggressively, but gingerly on the way down."