It happened again — this time with Hewlett Packard Enterprise . Shares soared nearly 25% after the company reported a blowout fiscal 2026 second quarter on strong data center demand. Like Dell , the HPE stock response appears justified, given an additional massive outlook hike. The Street was looking for full-year earnings per share (EPS) of $2.42. That was understandable because prior EPS guidance had been for between $2.30 and $2.50. Incredibly, HPE management went to $3.35 to $3.45, while also providing early positive commentary about fiscal year 2027. At the midpoint, the new guide represents a nearly 42% increase in HPE’s per-share profit outlook. The market had thought HPE was trading at about 19.6 times based on the prior fiscal 2026 earnings estimates — but looking back, based on the new numbers, it was actually trading at only 13.8 times. Even with its price surge to around $59, the stock is currently trading at roughly 17.4 times fiscal 2026 estimates, still below the pre-print valuation. Following Dell’s earnings last Thursday evening, shares surged nearly 33% the next day, another almost 11% on Monday, and about 2% on Tuesday. Dell and HPE are competitors. Both make servers, storage, and networking gear. Both are riding a huge wave of demand for data center infrastructure to run artificial intelligence. We have to concede that chasing moves like this is not our style, and when it comes to investing, sticking with the discipline that keeps you in the game for the long-term is the most important thing. However, it’s hard to argue against more upside in either of these stocks. If you’re going to hop in on HPE, parabolic moves are a risky game. There is a lot of hot money in HPE right now. The valuation is certainly interesting, but that doesn’t always matter to those who just made a boatload of money in a short period. That, along with position management by professional portfolio managers, is a factor that must be considered. It is tough to call these stocks a bubble, as they are making these moves on massively positive EPS estimate revisions. At most, the question becomes, are we in an earnings bubble? Meaning, are companies seeing incredible profits from AI that will ultimately prove unsustainable? While data center hardware has historically been a boom/bust business, the bull case now is that HPE and its competitors have worked to reduce that cyclicality. The only way to bet against the stocks is to bet against the view that the earnings profile has changed. Whether it has or has not really does not matter at the moment because there is no way to prove it. It’s one of those things the bulls and bears can fight over. We will only know for sure in hindsight as future quarters are released. For now, it looks to us that this market has room to run, as long as geopolitics don’t get in the way. During HPE’s post-earnings call, CEO Antonio Neri was asked how the company can raise its outlook so much when only three months ago, the guide was far more conservative. Neri said it came down to accelerating demand to support Agentic AI, those platforms that problem-solve and perform work without human intervention. He added that customers are worried about getting what they need and “don’t wait for things to improve” on memory pricing — so, they are just ordering. The bears can say whatever they want about bubbles and/or historically cyclical companies being wrongfully priced like secular growers. As it stands now, we are seeing 20% to 30% moves to the upside that still lag the moves we are seeing in upward earnings revisions. HPE is the latest example, with its aforementioned 42% EPS guide hike and 25% stock rally. The share price bubble argument does not hold up at the moment, as the valuations are, incredibly, holding steady or slightly declining due to earnings growth. Again, HPE’s valuation of around 17.4 times is below the 19.6 times pre-print multiple. As for the possible earnings bubble, calling for it to burst would require a call on when the data center money stops flowing, or at least slows. Given what we saw from Dell and HPE, heard from Nvidia at Computex, and expect from the upcoming initial public offerings (IPOs) of SpaceX, OpenAI, and Anthropic, demand for computing power will only increase. In the short run, we have been clear that those mega IPOs could weigh on the market as investors trim existing holdings to buy these hot new stocks. But those market dynamics do not derail the fundamental story. The money keeps flowing into AI infrastructure, which will support the earnings of companies like Dell, HPE, and the chipmakers. Betting against this trade, at least for now, may well be your ticket to the graveyard. (Jim Cramer’s Charitable Trust is long NVDA. See here for a full list of the stocks.) 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