If the US-Israel war rages on, the repercussions for investors could continue for years.
Richard Haass, former president of the Council on Foreign Relations, told Yahoo Finance’s Opening Bid that the days of ignoring global conflict are over. He specifically dismantled the theory that markets will return to a normal baseline.
“When you had oil as low as it was in the ZIP code of $60, there was no geopolitical risk premium priced in,” Haass said. “I don’t see us going back to that anytime soon.”
He added that until key issues — such as a formal agreement and leadership in Iran — are “resolved satisfactorily,” investors should “assume a risk premium is priced in for … probably years to come.”
Read more: How to protect your money as Mideast turmoil fuels market volatility
For Wall Street, skepticism has become the most rational response to current market resilience. Haass’s warning suggests that the risk-free environment of ultra-low interest rates and massive stimulus that fueled the last bull run was a mirage. This new geopolitical tax manifests as a higher cost of doing business, surging insurance premiums, and expensive backups that companies must build to survive.
This tax is arguably most apparent in tech and software. Investors have treated the sector as a safe bet, under the assumption that digital products don’t need barrels of oil to function.
But that illusion is breaking. The current conflict has exposed a massive vulnerability in the physical backbone of the internet. Data centers, the engines of the AI revolution, are massive energy consumers.
While Oracle (ORCL), for example, rocketed higher on earnings, the company is still tethered to a volatile power grid. Meta (META) is spending billions on new AI chips, while Nvidia (NVDA) is chasing cloud partnerships to keep its growth alive. But those chips require stable power and a reliable supply chain to get from the factory to the server rack.
As Haass noted, companies believed they could build enormous data centers by focusing only on cheap electricity. But energy security is now inextricably linked to geopolitical risk.
Consequently, supply chains can no longer be built for just speed; they must be built for survival. The shift is expensive, and the costs can trickle down to consumers, impacting everyone from tech giants to everyday shoppers.
For software stocks in particular, this means higher operating costs and potential delays, which could be catastrophic in the AI arms race. For the broader market, it means underlying instability remains the new floor.
