Now the same thing happened with Hewlett Packard Enterprise. Shares soared nearly 25% after the company announced a sharp decline in its fiscal second quarter 2026 results due to strong data center demand. Similar to Dell, HPE stock’s reaction appears justified given the significant outlook upgrade. TheStreet had expected full-year earnings per share (EPS) of $2.42. This was not surprising since previous EPS guidance was $2.30 to $2.50. Incredibly, HPE management increased its stock from $3.35 to $3.45 while simultaneously providing positive early commentary for fiscal 2027. At the midpoint, the new guide shows HPE’s earnings per share outlook increasing by nearly 42%. The market thought HPE’s stock was valued at around 19.6x based on previous fiscal year 2026 earnings estimates, but looking back, it was actually trading at just 13.8x based on the new numbers. Despite the price jump to around $59, the company’s stock currently trades at around 17.4 times 2026 estimates, still below its pre-print valuation. Following Dell’s earnings release last Thursday night, the stock soared nearly 33% the next day, rose another 11% on Monday, and rose about 2% on Tuesday. Dell and HPE are competitors. Both manufacture servers, storage, and networking equipment. Both are riding a huge wave of demand for data center infrastructure to run artificial intelligence. We have to admit that following such movements is not our style. When it comes to investing, having the discipline to stay in the game for the long term is paramount. But it’s hard to argue with further upside for either of these stocks. If you’re going to jump on HPE, parabolic movement is a dangerous game. There’s a lot of hot money in HPE right now. Valuations are certainly interesting, but they don’t necessarily matter to people who have made a lot of money in a short amount of time. This is a factor that needs to be considered in conjunction with position management by a professional portfolio manager. It’s hard to call these stocks a bubble because they’re making these moves based on significantly positive EPS estimate revisions. At best, the question becomes: Are we in an earnings bubble? In other words, are companies reaping incredible profits from AI that ultimately proves unsustainable? Data center hardware has historically been a boom-and-bust business, but the current bullish moment is as HPE and its competitors work to reduce that cyclicality. The only way to bet on a stock is to bet on the view that its earnings profile has changed. Whether it was or not doesn’t really matter at this point, since there’s no way to prove it. That’s one thing bulls and bears can fight over. We won’t know for sure until future quarters are released, only in hindsight. For now, it looks like this market has room to survive as long as geopolitics doesn’t get in the way. On HPE’s post-earnings conference call, CEO Antonio Neri was asked how he was able to raise the company’s outlook so much when guidance was much more conservative just three months ago. Ultimately, Neri said, this is due to accelerating demand to support agenttic AI, a platform that solves problems and performs tasks without human intervention. He added that customers are simply ordering because they are worried about getting what they need and “can’t wait for” memory pricing to improve. Bears can say all they want about bubbles and historically cyclical companies being priced as unfairly as secular growth companies. At present, we are seeing an upside of 20% to 30%, but we are still lagging behind the upward revision of earnings. HPE is the latest example, with a 42% increase in the aforementioned EPS guide and a 25% share price increase. Incredibly, valuations are flat or slightly down due to earnings growth, so the stock price bubble argument doesn’t hold up at this point. Again, HPE’s valuation of approximately 17.4x is lower than the preprint multiple of 19.6x. As for the possibility of a revenue bubble, looking for it to burst will require determining when the flow of data center capital stops, or at least slows down. Given what we’ve seen from Dell and HPE, what we’ve heard from Nvidia with Computex, and expectations from upcoming initial public offerings (IPOs) from SpaceX, OpenAI, and Anthropic, the demand for computing power is only going to increase. In the short term, it was clear that these mega IPOs could weigh on the market as investors pared down their existing holdings to buy these hot new stocks. But these market dynamics don’t derail the fundamental story. Money continues to flow into AI infrastructure, supporting the bottom lines of companies like Dell, HPE and chipmakers. Betting on this trade could be a ticket to the grave, at least for now. (Jim Cramer’s Charitable Trust is long NVDA. See here for a complete list of stocks.) 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