How the Iran War Broke Silicon Valley's Winning Streak

“It’s been a fun month!”- Said no one on Wall Street Since the U.S. decided to engage with Iran in a conflict that is upending global markets.

When U.S. and Israeli forces began strikes against Iran in late February 2026, Wall Street's initial reaction was almost dismissive. Analysts issued reassuring notes. History, they said, showed that geopolitical shocks rarely derailed corporate earnings for long. Investors had largely expected the Trump administration to take military action, limiting any shock. The market dipped, bounced, and dipped again. That was five weeks ago. Nobody is dismissing it anymore.

 The tech-heavy Nasdaq is now down 11% from its record high close on October 29 — officially entering correction territory. The S&P 500 posted its worst single-day loss since the war began on Thursday, dragging it to its lowest closing level since September. What started as a geopolitical tremor has become a full-scale repricing of risk across the technology sector.

PERFORMANCE SNAPSHOT: Feb 20 → Mar 26, 2026

Ticker

Feb 20 Close

Mar 26 Price

% Change

vs. Market

$SPY (S&P 500)

~$690

$646

−6.4%

Underperform

$QQQ (Nasdaq 100)

~$605

$575

−5.0%

Underperform

$NVDA (Nvidia)

~$193

$172

−10.9%

Underperform

$TSM (Taiwan Semi)

$370.90

$319

−14.0%

Underperform

$ASML Holding

$1,469.59

$1,334

−9.2%

Underperform

$AMD

$200.15

~$206

+3.0%

Outperform

$POET Technologies

$5.52

$5.49

−0.5%

Nearly Flat

Source: StockAnalysis.com, Investing.com, Robinhood. All prices approximate.

Oil Is the Match. Rates Are the Gasoline.

The mechanism is straightforward, even if the pain is not. The closure of the Strait of Hormuz continues to disrupt energy supplies. The International Energy Agency has warned the conflict is disrupting 7.5% of global oil supply. Brent crude is up nearly 40% from the beginning of the war.

For the tech sector specifically, that is a gut punch. Energy costs can account for up to 60% of a data center operator's expenses, so soaring oil prices are driving AI companies to scrutinize their purchases of high-end GPUs. Every dollar added to the energy bill is a dollar subtracted from capex budgets — and in an industry where the growth thesis depends on relentless infrastructure spending, that math matters.

"The stock market remains in negative territory for the year and has made new 2026 lows this week, which suggests the market may not have yet found its bottom and is still in the process of sorting out and pricing in the duration of the conflict and oil price outlook." — David Laut, CIO, Kerux Financial

Higher oil also stokes inflation, which forces the Fed's hand. Elevated rates compress the multiples of growth stocks, and tech — trading at some of the richest valuations in market history heading into 2026 — has the most to lose. The Energy Select Sector SPDR Fund has officially outperformed the technology-heavy QQQ for the first time since the early 2020s, signaling a regime change that many analysts believe is here to stay.

NVDA and TSM: The Hardest Hit

NVIDIA (NVDA) is off 10.9% since February 20, sliding from ~$193 to ~$172. Thursday's session brought fresh pain as a Google research paper revealed a new AI compression technique that could reduce memory requirements — raising questions about the pace of GPU demand growth just as energy cost headwinds mount. The stock's GTC conference in mid-March briefly lifted sentiment, but the broader macro environment has proven too heavy a weight to shake.

Taiwan Semiconductor (TSM) has suffered the steepest decline of the group, falling 14% from $370.90 to $319. TSM carries a compounding risk that the others do not: geopolitical exposure to the Taiwan Strait in addition to the Iran conflict's oil shock. With the Strait of Hormuz disrupted and global supply chain uncertainty elevated, investors are discounting the cost of a potential second theatre of geopolitical risk. TSM manufactures chips for virtually every major AI player — meaning its pain flows downstream to the entire industry.

ASML (ASML) has dropped 9.2%, from $1,469.59 to ~$1,334. The Dutch lithography monopoly remains a consensus long-term buy — Bernstein recently maintained an Outperform with a $1,971 price target and SK Hynix just placed an $8 billion tool order — but near-term sentiment has cooled alongside the rest of the sector. Export control risks on China sales, which represented 29% of 2025 revenue, add an additional layer of uncertainty.

AMD: The Relative Bright Spot in Semis

Of the major semiconductor names, Advanced Micro Devices (AMD) has held up better than its peers, essentially flat to slightly positive since February 20 — a meaningful divergence from the group. That resilience has a thesis behind it. When energy costs soar and data center operators tighten budgets, AMD's value positioning versus NVIDIA's premium becomes more attractive. Higher energy costs could drive more data center operators toward AMD's cheaper GPUs or custom AI accelerators.

AMD guided Q1 2026 revenue to approximately $9.8 billion, with data center growth offsetting seasonal client and gaming weakness. South Korean AI startup Upstage is in advanced discussions to purchase 10,000 MI355 AI accelerators. AMD's EPYC server CPU line continues to take share from Intel, and its Instinct GPU platform is gaining traction with hyperscalers looking for alternatives to NVIDIA's locked ecosystem.

AMD's outperformance reflects a broader market shift: when every watt of compute costs more to power, the value proposition of cost-competitive chips improves regardless of geopolitics.

POET Technologies: The Outlier Nobody Expected

In a sector defined by double-digit percentage losses, POET Technologies (POET) stands as one of the most counter-intuitive stories of the past five weeks. While Nasdaq heavyweights have been selling off in lockstep with oil price spikes, POET — a small-cap photonics company developing optical integration platforms for AI data centers — is down a fractional 0.5% since February 20. Against the backdrop of a Nasdaq in correction, that is outperformance.

That resilience is not accidental. POET's Optical Interposer platform enables chip-to-chip communication at the speed of light rather than through copper wire — a technology that becomes more valuable, not less, as energy efficiency becomes the AI industry's paramount concern. Optical interconnects consume a fraction of the power that traditional electrical connections require, making POET's pitch to data center operators more compelling the higher energy costs climb.

March brought a convergence of catalysts that kept the stock supported even as the broader market sold off. POET announced a joint development agreement with LITEON for optical modules targeting AI applications. The company expanded its partnership with Lessengers to develop 1.6T optical transceivers for hyperscale data centers, with samples targeted for Q2 2026. At the OFC Conference in Los Angeles, POET demonstrated its Blazar and Starlight light source products and accepted a Lightwave Elite Score award.

Volume tells a complementary story. During March's turbulence, POET averaged over 9.7 million shares traded per day — more than eleven times the volume the stock saw during a paid newsletter promotion campaign in March 2025. The difference is institutional engagement driven by real catalysts versus retail newsletter readers.

The Bigger Picture: A Regime Change in Tech

Analysts note that of the four historical oil shocks that led to S&P 500 declines greater than 10% — the 1973 oil embargo, the Iranian hostage crisis, the 1990 Gulf War, and the Russian invasion of Ukraine in 2022 — each coincided with either a recession in the six months after the shock or Federal Reserve interest rate increases. History is not destiny, but it is not irrelevant either.

For now, traders are watching Trump's deadline extensions closely. Futures pared some losses Thursday evening after President Trump pushed back his deadline for Iran to strike a deal. Every ceasefire rumor produces a relief rally; every escalation headline produces a selloff. The market is pricing uncertainty, not a known outcome.

In that environment, the winners are likely to be companies whose value proposition centers on energy efficiency, cost reduction, and infrastructure resilience — not raw compute horsepower that is expensive to power and increasingly subject to supply chain disruption. POET's optical interconnect story, AMD's cost-competitive GPU thesis, and the broader photonics sector's emergence as a legitimate AI infrastructure play all fit that template.

The tech wreck of 2026 has a clear villain in crude oil and geopolitical risk — but it may also be clarifying which technologies actually matter when the easy money stops flowing and every watt counts.SPY: S&P 500 Outlook, Near-Term Risk and Long-Term Resilienc Trump Pauses Strikes On Iranian Energy Sites