Standard Chartered said the effective closure of the Strait of Hormuz and the current energy shock could create short-term and longer-term pressures for AI-related activity. It flagged near-term risks to semiconductor input supplies.
Over the medium term, the bank said the key risk is a drop in spending on AI. It also said demand for AI products could weaken, even if investment and output are only modestly affected.
Oil Shock Risks For AI And Semiconductors
The note referred to past oil shocks, which were linked to slower adoption of technology by firms and weaker productivity growth. It said this happened as higher operating costs led firms to reduce tech-related spending.
It added that the effect was worse during supply-driven oil shocks and in periods of heightened economic policy uncertainty. The article stated it was produced with the help of an AI tool and reviewed by an editor.
With the Strait of Hormuz effectively closed, we are seeing a significant energy shock unfold. Brent crude has surged past $115 a barrel, a level not sustained since early 2025, challenging the market’s prevailing AI optimism. This disruption affects nearly a fifth of the world’s daily oil supply, creating immediate operational cost pressures for energy-intensive sectors like semiconductor manufacturing.
We should consider buying put options on semiconductor indices and key AI players that saw massive rallies through 2025. The rising cost of energy threatens their supply chains and profit margins, making them vulnerable to a sharp correction from their high valuations. Simultaneously, rising market volatility, as reflected by the VIX climbing above 25, suggests that long volatility positions could be profitable.
Positioning For A Tech Valuation Reset
History shows us that energy-driven supply shocks, like the ones in the 1970s, often lead to reduced business investment in new technology. As companies face higher operating costs from fuel and electricity, capital expenditures on things like AI infrastructure get delayed. We saw a similar, though smaller, pullback in tech spending during the energy price spike of 2025.
Looking a few weeks out, the primary concern shifts from immediate supply chain issues to a potential drop in AI investment and demand. The premium valuations of many tech firms are based on aggressive future growth assumptions, which become questionable if their customers cut spending. Therefore, we may want to look at longer-dated put options or even consider short positions on broader tech indices like the Nasdaq 100.
