Nvidia, Oil, and a General Sense of Impending Doom

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My aunt Carol, who believes everything she reads on Facebook, cornered me at Thanksgiving and wanted to know if the war in Iran was going to “destroy” my Nvidia stock. She’s recently taken up day trading, mostly based on the advice of a man named “CryptoKing69” and, frankly, I was bracing for a full-blown conspiracy theory. I mumbled something about supply chains and geopolitical risk, which she interpreted as validation of her fears. It got me thinking, actually. Nvidia is a bit of a juggernaut, but even juggernauts are susceptible to…well, everything.

The Price of Getting Things From Point A to Point B

The thing about semiconductors, beyond the fact that they’re bafflingly complex, is that they need to move. And movement, these days, costs money. A lot of it. The price of oil, predictably, has decided to stage a dramatic comeback, largely because of the situation in the Strait of Hormuz. Apparently, it’s a choke point. Who knew? I always pictured oil just…floating along, politely asking to be refined. But no, it needs a clear path, and when that path gets constricted, everything gets more expensive.

This impacts Nvidia, naturally. They don’t exactly mine their own silicon; most of it comes from Taiwan, specifically from Taiwan Semiconductor Manufacturing. And getting those little chips across the Pacific isn’t done by carrier pigeon, despite my best efforts to suggest it. It’s air freight, which, as you can imagine, runs on…you guessed it, fuel. So, the cost of shipping those GPUs goes up, and that, inevitably, affects their margins. It’s a beautifully depressing cycle.

I overheard a colleague explaining this to a client, using the phrase “logistical headwinds.” I nearly choked on my coffee. “Logistical headwinds.” It sounds like a minor inconvenience, like a slightly bumpy flight. It’s not. It’s a global economic problem dressed up in corporate jargon.

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A Sliver of Hope (Maybe)

But here’s the thing. Nvidia isn’t exactly a mom-and-pop operation. They buy things in quantities that would make Jeff Bezos blush. That gives them a certain amount of leverage. They can, theoretically, strong-arm the shipping companies into…well, not exactly giving things away, but perhaps offering a slightly less extortionate rate. And, let’s be honest, demand for their AI chips is so insane right now, they might be able to pass some of those costs onto customers. It’s a bit like a restaurant raising prices because the avocado toast is suddenly more expensive. We complain, but we still order it.

I’m expecting their first-quarter results, due out later this month, to be…robust. Jensen Huang, their CEO, is practically radiating optimism at every conference. He’s like the guy who always finds a silver lining, even when the entire cloud is made of lead. And while I’m generally skeptical of CEOs who promise the moon, I have to admit, Nvidia is on a roll.

They have margins to spare, too. Their gross margin is a healthy 71.3%, and their profit margin is a respectable 54.2%. Compare that to Advanced Micro Devices, their main competitor, with a gross margin of 52.4% and a profit margin of just 19.7%. It’s not a landslide, but it’s enough to make you wonder if AMD’s CEO is secretly rationing paperclips.

The stock has been stuck in a bit of a rut lately, but that’s probably just the overall market jitters. A small-to-moderate impact from the war isn’t going to derail Nvidia. It’s a resilient company, and frankly, it’s built to withstand a certain amount of chaos. Which, in today’s world, is a very good thing.

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2026-03-25 03:22