3 Artificial Intelligence (AI) Stocks Caught in the Iran War Crossfire, and What Smart Investors Should Do in 2026

The explosive growth of the artificial intelligence (AI) market drove many tech stocks to their record highs in recent years. However, many of those high-flying stocks pulled back in recent months as the war in Iran intensified. Let's examine three of the top AI stocks caught in the crossfire -- Amazon (NASDAQ: AMZN), Nvidia (NASDAQ: NVDA), and TSMC (NYSE: TSM) -- and see what smart investors should do for the rest of this tumultuous year.

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How were Amazon, Nvidia, and TSMC affected?

Amazon owns Amazon Web Services (AWS), the world's largest cloud infrastructure platform. In early March, Iran attacked AWS data centers in the UAE and Bahrain with drones and missiles in an attempt to cripple the region's websites, apps, and cloud services. As of this writing, two of AWS's three availability zones in the UAE remain "impaired", while the third one is operating "normally" with an "indirect impact due to dependencies on the affected zones".

Amazon's e-commerce business is also being affected by higher oil prices and disruptions of shipments through the Strait of Hormuz. Higher oil prices could exacerbate inflation and curb consumer spending on its e-commerce marketplace, which generates most of its revenue. As that happens, AWS -- which generates most of its profits -- could struggle with higher expenses.

Nvidia, the world's largest discrete GPU maker, generates most of its revenue from the data center market. Energy costs can account for up to 60% of a data center operator's expenses, so soaring oil prices could drive AI companies to throttle their purchases of Nvidia's pricey GPUs. They could also drive more data center operators to buy AMD's (NASDAQ: AMD) cheaper GPUs or develop their own custom AI accelerators with Broadcom (NASDAQ: AVGO).

TSMC, the world's largest contract chipmaker, manufactures chips for Nvidia and other leading AI chipmakers. If those fabless chipmakers struggle with slower orders, TSMC's revenue will decline. Meanwhile, higher energy costs will drive up its manufacturing expenses.

All three of these stocks will also lose their luster if the Iranian war intensifies and sparks a rotation from higher-growth tech stocks toward more conservative investments. Energy and defense stocks will likely draw many investors away from AI-driven stocks.

What should smart investors do this year?

The smartest thing for investors in Amazon, Nvidia, and TSMC to do this year is to simply do nothing. AWS still has 35 local regions worldwide, and it will remain the backbone of the global internet regardless of the near-term challenges in the Middle East. As for its e-commerce business, it's weathered numerous oil price spikes and logistics disruptions over the past two decades.

Nvidia might suffer a near-term slowdown if macro headwinds prompt data center operators to rein in spending, but it still controls over 90% of the data center GPU market. It also locks those customers into its proprietary software and services, so it should remain the top maker of picks and shovels for the booming AI market for the foreseeable future.

As for TSMC, it will continue to produce the world's smallest, densest, and most power-efficient chips. It's certainly a cyclical stock, but it's far ahead of its closest competitors -- Samsung and Intel (NASDAQ: INTC) -- and remains a linchpin of the semiconductor market's growth.

According to Grand View Research, the global AI market could still expand at a 30.6% CAGR from 2026 to 2033 as more industries adopt AI tools to streamline their operations. Geopolitical conflicts could also create long-term tailwinds for the AI industry, as more governments adopt AI-powered platforms to predict future events and plan their military strategies.

Therefore, selling Amazon, Nvidia, TSMC, and other top AI stocks simply because the Iranian conflict is escalating would be a myopic move. Instead, investors should tune out the near-term noise and focus on the compelling reasons to hold these stocks for a few more decades.

Leo Sun has positions in Amazon. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Intel, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.