Oil-driven volatility linked to escalating tensions between the U.S. and Iran is rattling markets, but historical trends suggest such disruptions may create opportunities for long-term investors.
BNN Bloomberg spoke with Whitney Stewart, executive director and client portfolio manager at Sterling Capital, who said past geopolitical shocks and oil price spikes have often been followed by equity gains, while highlighting selective opportunities within artificial intelligence infrastructure and power-related technology.
Key Takeaways
- Historical data shows equities have a strong likelihood of positive returns one to three years after geopolitical shocks.
- Oil price spikes of around 20 per cent have typically been followed by equity gains and lower oil prices a year later.
- Past market drawdowns tied to policy or crises have provided attractive entry points for long-term investors.
- The technology sector is increasingly divided, with software under pressure from margin compression and rising competition.
- Investment opportunities are emerging in AI infrastructure, including cloud platforms, data centres and power solutions.
Read the full transcript below:
ANDREW: Let’s get perspective from Whitney Stewart, client portfolio manager at Sterling Capital. Whitney, thanks very much for joining us. Can we start with your thoughts on oil?
WHITNEY: Yes. Good morning, Andrew, and happy Easter. In our view, oil is one of the three main factors the market is focused on right now: Iran, oil and artificial intelligence.
We try to use history as a guide to project what may happen in the future. Historically, when you get a geopolitical event, there is a 73 per cent chance the S&P 500 will be positive one year later and an 86 per cent chance it will be positive three years later. For longer-term investors, we would lean into this recent correction or decline.
If you look at oil shocks specifically, when you have a 20 per cent increase in oil, one year later the S&P 500 is on average up 18 per cent, while oil is down seven per cent. So again, we tend to lean on history, and for long-term investors, we believe this may present opportunities.
ANDREW: So typically, in the past, if oil goes up 20 per cent, the U.S. market is up about 18 per cent a year later?
WHITNEY: Correct. It doesn’t feel like that while it’s happening, especially when you have missiles flying, loss of life and concerns around the Strait of Hormuz. As you mentioned, roughly 20 per cent of the world’s oil flows through that Strait, and about 40 per cent of China’s oil passes through it.
There is clearly risk, but the question is timing. When you look at the history of the Trump administration during these types of events, they have almost exclusively been strong buying opportunities.
Last year, tariffs led to a near 20 per cent correction — a good entry point. During COVID-19, there was a roughly 30 per cent drawdown, followed by significant fiscal and monetary stimulus, which benefited investors who bought the dip. In 2018, there was another near 20 per cent correction tied to trade policy uncertainty — again, an opportunity for long-term investors.
In this situation, we also have midterm elections approaching, and the Iran conflict is not polling well in the U.S. From both a political and economic perspective, there are incentives to drive a resolution relatively soon, which could lead to stocks rising and oil prices falling.
ANDREW: What about tech? We’ve seen a sharp move in oil recently. What are your thoughts on technology, given it has come off its highs?
WHITNEY: Tech is very bifurcated. The overall sector is down, but within it, software is clearly the trouble spot and is in a bear market, down more than 20 per cent, with some names down 30 to 50 per cent.
When we think about software, we focus on four key factors. First is moat — whether companies can defend their position against AI. Second is market — whether their markets will become more competitive as AI lowers barriers. Third is margins — many companies historically had 80 to 90 per cent gross margins, but there are expectations those could move closer to 50 per cent. Finally, valuation — even after declines, some stocks may still not be cheap enough if fundamentals deteriorate.
There are opportunities, but investors need to be selective.
ANDREW: You’re in the camp that believes Microsoft will emerge as a winner?
WHITNEY: Yes. While Microsoft is often grouped with large-cap tech, we view it differently. It has one of the strongest balance sheets globally, is AAA-rated and generates significant cash flow even after heavy investment in data centres.
If you believe in AI as a long-term trend, Microsoft is well positioned. Its Azure cloud platform is growing at a strong pace, and demand for computing power is likely underestimated.
Microsoft also benefits from deep relationships with enterprise clients, allowing it to cross-sell products. Strategically, it has shifted from relying primarily on OpenAI to offering a broader range of AI services through its cloud, similar to a platform model.
Combined with strong cybersecurity capabilities, this positions Microsoft as a long-term beneficiary of AI rather than a loser.
ANDREW: You also mentioned Nvidia CEO Jensen Huang and the expected surge in computing demand. Let’s turn to EnerSys. What do they do?
WHITNEY: EnerSys is a power management company. It is not purely an AI play, as it also has exposure to aerospace, defence and industrial applications like forklift batteries.
However, its data centre business is growing at more than 25 per cent. Data centres require significant power and storage, and EnerSys provides battery solutions that support that demand.
Given constraints around building new utility infrastructure in the U.S., alternative power solutions are critical. EnerSys is helping fill that gap, and we see that as a key growth area.
ANDREW: We’ll have to leave it there. Whitney Stewart, executive director and client portfolio manager at Sterling Capital. Thanks for your time.
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This BNN Bloomberg summary and transcript of the April 6, 2026 interview with Whitney Stewart are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
