Will Nvidia's Financial Results Be Hurt by the Iran War and High Oil Prices?
Will Nvidia's Financial Results Be Hurt by the Iran War and High Oil Prices?
Beth McKenna, The Motley FoolWed, March 25, 2026 at 12:40 AM UTC
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Key Points -
Nvidia is, no doubt, facing higher supply chain costs, mainly due to higher transportation costs stemming from soaring crude oil prices.
Nvidia’s GPUs are in such great demand that it might be able to pass at least part of its increased supply chain costs onto customers, at least those with whom it didn’t already have contracts with definitive pricing.
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Some of you who own Nvidia (NASDAQ: NVDA) stock or are considering buying the artificial intelligence (AI) chip and infrastructure leader's stock might be wondering if the Iran war, which began on Feb. 28, will hurt Nvidia's financial results. Let's explore this question.
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Supply chain costs are already rising
An increase in supply chain costs is probably already hurting Nvidia's financial results (and those of many other companies). This increase in supply chain costs is mainly due to significantly higher transportation costs stemming from soaring crude oil prices.
Crude oil prices have skyrocketed since the war began. This is because Iran has effectively closed the Strait of Hormuz to oil tankers and other ships. This narrow waterway, which is off Iran's southern coast, is critical for the global oil supply since about 20% of the world's oil passes through it.
Surging crude oil prices have already driven up the prices of various distillates, including gasoline, diesel fuel (used by many delivery trucks), jet fuel (used by many aircraft, including cargo planes), heavy fuel oil (used by most cargo ships), and heating oil. These increases have boosted select oil stocks, but have hurt many other stocks.
Nvidia sources components from around the world, particularly Taiwan, where Taiwan Semiconductor Manufacturing manufactures its graphics processing units (GPUs). Nvidia reportedly primarily transports its GPUs from Taiwan to the U.S. using rapid air freight. An increase in inbound freight costs for its components will likely hurt Nvidia's gross margin and, in turn, its profit margin.
Moreover, increased transportation costs will increase its delivery costs to customers, hurting its operating and profit margins.
But -- here's the good news
While I expect that increased supply chain costs will impact Nvidia's financial results, the impact should be minimal unless the war – and effective closure of the Strait of Hormuz – drags on for a long time.
While Nvidia isn't immune to higher transportation costs, its status as a massive company and customer should give it some leverage with transportation companies.
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Moreover, Nvidia's AI-enabling GPUs are in such great demand that it might be able to pass at least part of its increased supply chain costs onto customers, at least those with whom it didn't already have contracts with definitive pricing.
Lastly, I expect Nvidia's fiscal first-quarter results (which should be released in late May) to be powerful and once again sprint by Wall Street's estimates, as did its fiscal Q4 results. This opinion is based on CEO Jensen Huang's extremely bullish comments at the company's GTC 2026, the world's largest AI conference, earlier this month.
In other words, a small-to-moderate impact from the Iran war shouldn't make much of a difference. Nvidia has gross, operating, and profit margins to spare, so to speak. In its last fiscal year (fiscal 2026, ended late January), its adjusted gross margin and adjusted profit margin were 71.3% and 54.2%, respectively. For context, in its last fiscal year, chipmaker Advanced Micro Devices (AMD) -- Nvidia's primary GPU competitor -- had an adjusted gross margin of 52.4% and an adjusted profit margin of 19.7%.
Granted, Nvidia stock has been stuck in a relatively tight trading range for some time, but that's partly because the Iran war has hurt the overall market for over three weeks. The stock is still on track to be a big winner over the mid- and long-term.
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Beth McKenna has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
Source: “AOL Money”
