Shares of Nvidia (NVDA) experienced a downturn as part of a wider technology sector selloff, with the ongoing Iran conflict raising concerns about supply chain costs and market instability. The decline illustrates investor concerns regarding potential disruptions to semiconductor production and critical shipping lanes that support the AI chipmaker’s business operations.
Key Takeaways
- Iran war creates supply chain headwinds for chip manufacturers
- Oil price surge increases transportation costs for global operations
- Nvidia’s strong margins provide buffer against moderate cost increases
Market reaction & context
Shares of Nvidia have dropped roughly 20% since their October highs, with the stock now trading at its lowest price-to-earnings ratio in seven years 1. This decline occurs as Bloomberg’s Magnificent Seven index approaches correction territory, falling nearly 10% from its recent peaks 2.
The semiconductor industry broadly has encountered headwinds as Iran’s effective blockade of the Strait of Hormuz has interrupted global oil transportation, pushing crude prices upward and raising shipping costs globally 3. Approximately 20% of the world’s oil moves through this strategic waterway, making its closure a major supply chain risk for companies that source materials internationally.
Supply chain impact analysis
Nvidia obtains components primarily from Taiwan, where Taiwan Semiconductor Manufacturing fabricates its graphics processing units, and depends significantly on air transportation for quick delivery 4. Higher jet fuel prices and elevated shipping costs directly affect the company’s gross margins, although analysts point out that Nvidia’s exceptional profitability offers considerable protection.
During its latest fiscal year, Nvidia achieved an adjusted gross margin of 71.3% and profit margin of 54.2%, markedly higher than rival Advanced Micro Devices’ 52.4% gross margin and 19.7% profit margin 4. This significant margin superiority indicates the company can weather moderate cost increases without serious earnings damage.
Expert commentary
Market strategists maintain cautious optimism regarding Nvidia’s outlook despite present challenges. “The Magnificent Seven have had multiple episodes over the past few years where their valuations get ahead of fundamentals and then they spend months working off the exuberance,” said Sameer Samana, head of global equities at Wells Fargo Investment Institute 2.
Nevertheless, certain analysts voice worries about broader technology sector risks. “Everything’s running on Nvidia chips, but that doesn’t mean it’s going to be that way in two or three years,” said Dennis Dick, a proprietary trader at Triple D Trading 1.
Valuation opportunity
Despite recent weakness, some market observers consider current price levels as appealing entry opportunities. Art Hogan, chief market strategist at B. Riley Wealth, said his firm continues to recommend Nvidia to clients, noting “Trading at a multiple that is lower than the S&P 500, I think it’s an easy decision to make” 1.
The company’s dominant competitive position in AI infrastructure and persistent strong demand from leading cloud providers including Microsoft, Alphabet, and Amazon indicate that fundamental business strength remains solid despite geopolitical challenges.
Outlook considerations
Though supply chain costs pose a near-term challenge, analysts anticipate Nvidia’s forthcoming fiscal first-quarter earnings will show continued robust performance. CEO Jensen Huang’s optimistic remarks at the recent GTC 2026 conference reinforce expectations for ongoing AI infrastructure spending 4.
The company’s potential ability to transfer higher costs to customers, paired with sustained elevated demand for AI-enabling GPUs, could help offset margin pressure from increased transportation expenses.
Not investment advice. For informational purposes only.
References
1Reuters (March 30, 2026). “Nvidia’s PE sinks to seven-year low as war and AI angst weigh”. CTV News. Retrieved April 7, 2026.
2Joel Leon, Annika Inampudi and Matthew Griffin (March 12, 2026). “Tech Giants Hover on Cusp of a Correction as War Heats Up”. Yahoo Finance. Retrieved April 7, 2026.
3Jim Cramer (March 26, 2026). “Iran war has something to do with Nvidia stock being down, but it’s not totally quantifiable, says Jim Cramer”. CNBC. Retrieved April 7, 2026.
4Beth McKenna (March 24, 2026). “Will Nvidia’s Financial Results Be Hurt by the Iran War and High Oil Prices?”. The Motley Fool. Retrieved April 7, 2026.