Nvidia's stock performance is being influenced by a complex mix of geopolitical tensions, supply chain pressures, and a resurfaced legal challenge. The company, a cornerstone of the AI investment theme, has seen its shares become rangebound since late February 2026, when the Iran-Israel conflict escalated. This geopolitical event led Iran to effectively close the Strait of Hormuz, a critical chokepoint for 20% of global oil supply, causing a surge in oil prices.
The rise in Brent crude to above $108 per barrel and West Texas Intermediate to over $95 has increased transportation costs across the board. For Nvidia, which relies heavily on air freight from Taiwan Semiconductor Manufacturing Company (TSMC) in Taiwan to ship its GPUs globally, higher jet fuel costs directly pressure its gross margins. Delivery costs to customers have also risen, squeezing operating margins.
However, analysts note Nvidia's significant financial cushion mitigates these risks. The company reported an adjusted gross margin of 71.3% and an adjusted profit margin of 54.2% for fiscal year 2026, ended in late January. This compares favorably to rival AMD's 52.4% gross margin. Wolfe Research analyst Chris Senyek highlighted that Nvidia's robust margins and pricing power—stemming from continued high demand for its AI chips—provide a buffer to absorb moderate cost increases.
A potential shift in the geopolitical landscape could reignite investor interest. Recent signals from former President Donald Trump about ongoing talks with Iran for a potential deal have calmed markets, with oil prices dropping on the prospect of eased tensions. Wolfe Research posits that a successful agreement could trigger a rotation of capital back into risk assets, with U.S. mega-cap tech and AI stocks like Nvidia being prime beneficiaries due to its data center dominance and chip leadership.
Concurrently, Nvidia faces a renewed legal challenge. On March 25, a California federal judge certified an investor class in a securities lawsuit against Nvidia and CEO Jensen Huang. The lawsuit alleges the company misclassified over $1 billion in revenue from GPU sales to cryptocurrency miners within its Gaming segment during the 2017-2018 crypto boom, thereby downplaying its exposure to the volatile crypto market and potentially misleading shareholders. This case revisits issues from a 2022 settlement where Nvidia paid a $5.5 million penalty to the SEC over similar disclosure failures.
Despite these headwinds, Wall Street maintains a bullish long-term outlook. Approximately 93% of analysts rate the stock a buy, with firms like Bank of America, Rosenblatt Securities, and Raymond James setting price targets between $300 and $360, citing confidence in Nvidia's entrenched position in the AI ecosystem.
