Shares of XLK slid 1.5% to $127.94 on Monday, extending a brutal week-long decline of 6.6% as the Iran war's energy shock batters the very sector investors once considered immune to old-economy risks. Brent crude hit $111.10 per barrel as of Monday morning, up roughly $37.69 over the past year. For a fund that holds zero energy stocks and derives 100% of its exposure from tech, every dollar added to oil is a dollar subtracted from growth expectations.
~39% of the Fund Rides on Three Stocks — and All Three Face Energy Headwinds. XLK concentrates nearly 39% of assets in just three holdings: Nvidia at 15.25%, Apple at 13.61%, and Microsoft at 9.96%.
Rising oil prices affect almost every business, but they can be particularly scary for AI — chip manufacturing and data center operations demand tremendous energy, and even though they don't typically run directly on oil, the strain they place on energy infrastructure could send production costs soaring.
Microsoft, Meta, Google, and Amazon are collectively spending over $300 billion on data centers in 2026 alone, mostly powered by natural gas — a fuel whose European and Asian prices have already surged 54–63% since the conflict began.
The Strait of Hormuz Blockade Is Unlike Anything Markets Have Seen. The head of the International Energy Agency called this "the greatest global energy security challenge in history."
Brent crude surpassed $100/barrel on March 8 for the first time in four years, peaking at $126.
Citi forecasts Brent could rally to $120 again, projecting supply disruptions of 11–16 million barrels per day through April. If negotiations collapse after Trump's April 6 deadline, prices could climb further, deepening the rotation out of growth stocks.
Investors Are Fleeing Tech for Energy and Value — Fast. The Energy Select Sector ETF (XLE) has returned over 40% year-to-date in 2026 while the S&P 500 has declined roughly 6%.
XLK saw $1.66 billion in net outflows over three months , and short interest nearly tripled from 6.5 million shares in November to over 18 million by late January. The message is clear: money is chasing barrels, not bytes.
A Ceasefire Could Snap the Trade Back — But the Timeline Is Anyone's Guess. A resolution would likely send oil down 20–30% within days as the Strait reopens and supply normalizes. That would instantly relieve pressure on tech valuations. But with the U.S. deploying ground forces and Iran legislating permanent Hormuz tolls, this looks like a longer conflict. Until clarity arrives, XLK shareholders are hostage to a war over a waterway 7,000 miles from Silicon Valley.