Tech investors loved this earnings season — but the Iran war is piling pressure on the companies powering the AI boom

The AI rally continued this earnings season. But companies constructing the underlying {hardware} powering the boom warned that the Iran war is placing pressure on their provide chains and profitability.

A spiraling battle in the Center East has seen oil costs skyrocket and provide chains essential to the tech sector hamstrung. Shortages of key chipmaking supplies, together with helium, are anticipated as the U.S. and Iran stay locked in a standoff.

TSMC, which manufactures Nvidia chips, stated the scenario in the Center East might affect its profitability, with costs for sure chemical compounds and gases more likely to improve. Foxconn, the world’s largest contract electronics producer, singled out occasions in the Center East as a key problem this 12 months. Chipmaker Infineon stated prices would rise for valuable metals, vitality and freight on account of the war.

The companies’ scenario might worsen, Francisco Jeronimo, analyst at IDC, advised CNBC.

“We will anticipate additional unfavourable affect this 12 months…the value of fuel, vitality and freight are at an all-time excessive and are more likely to stay excessive for a number of extra quarters, even when the scenario de-escalates,” he stated. “Even with a possible ceasefire, the supply-side harm does not enhance in a single day.”

Provide chain disruption and vitality prices are two areas of concern for chip companies amid the Iran war.

Helium, which is primarily produced as a by-product of pure fuel manufacturing, is essential to semiconductor manufacturing. Qatar, the world’s second-largest provider which owns a part of the world’s largest fuel discipline, has seen its export capability hamstrung by Iranian strikes. Qatar offered over 30% of the market in 2025, in line with S&P International.

Entry to different supplies essential to the semiconductor manufacturing course of, reminiscent of bromine and aluminium, have additionally been impacted. In March, chip patrons in Europe have been paying extra and tapping backup shops as the war disrupted air freight.

Chip companies “all perceive they should diversify to be much less dependent on a selected area,” stated Jeronimo. From a short-term perspective, TSMC is constructing stock buffers and diversifying sourcing, he added.

The Taiwanese chipmaker’s technique was “to constantly develop multi-source provide options to construct a well-diversified international provider base and to enhance the native provide chain,” Chief Monetary Officer Wendell Huang stated on an earnings name in April.

VAT Group, which provides elements to chipmakers, stated it skilled provide chain disruption and needed to reroute shipments of products to clients on account of the war. Whereas the firm stated it anticipated no materials affect on its 2026 full-year outlook, gross sales for its first quarter took a success of 20-25 million Swiss francs ($25.5 million to $32 million), the firm reported.

Rising vitality prices are presently a “most acute” drawback for producers and fabs, Sebastien Naji, analyst at William Blair, advised CNBC.

But the longer the battle in the Center East lasts, the “extra important the second and third order impacts on element prices, vendor margins and total AI knowledge heart economics,” he added.

Provide chain impacts and rising prices which have been uncovered this firm earnings season might simply mark the starting of the headwinds ought to a U.S.-Iran stalemate proceed to play out.

“If the blockade continues via the summer time, we usually tend to revisit the dangers and impacts in future earnings durations,” Naji stated.

As of Monday, there have been no indicators that the U.S. and Iran have been any nearer to reaching a deal as U.S. President Donald Trump ramped up threats to Tehran on Sunday.

Japanese semiconductor testing tools maker Advantest stated in its earnings that the “enterprise setting surrounding the firm stays unpredictable” on account of “issues of escalating tensions in the Center East doubtlessly resulting in a slowdown in the international financial system.”

Whereas the direct affect on earnings was presently restricted, the firm stated, sure prices, together with in logistics, had already arisen, and provide chain shortages might emerge.

But to date, the AI boom is cushioning any investor warning, with shares persevering with to rally.

“Any disruption to date has been fully overshadowed by the upswing in investor confidence in AI,” Michael Subject, chief fairness strategist at Morningstar, advised CNBC, pointing to huge good points in latest weeks from chip companies.

Nasdaq’s PHLX Semiconductor Sector Index — comprising the 30 largest U.S.-traded chip companies — has risen 41% over the previous three months.

“The companies that can be insulated [against impacts from the Iran war] are the ones with security inventory, diversified sourcing and pricing energy on manufacturing capability,” stated Jeronimo.

“Everybody else can be underneath rising price pressure for the remainder of 2026.”