War in Iran has knocked a whole heap of FTSE 100 stocks, and Rolls-Royce (LSE: RR) shares haven’t escaped unscathed. Since peaking at 1,363p on 4 March, they’ve dipped to 1,216p today. That’s a drop of more than 10%. Of course, long-term investors can live with that. The shares are still up 960% over five years. But is the fun drawing to a close?

Common sense says that shares in the aircraft engine maker have to slow at some point. This is now a £100bn business, after all. And there are signs it’s happening. While the shares are still up 58% over the last year, they’ve nudged up just 7.5% in the last six months. Of course, some may see this as a buying opportunity.

FTSE 100 star turn

Many investors will be looking for a way into this stock. It’s the ultimate blue-chip momentum play right now. And incredibly, it’s justified the excitement, with CEO Tufan Erginbilgic setting ambitious targets, then beating them. In July last year, he upgraded the group’s 2025 targets to underlying operating profit of £3.1bn–£3.2bn. On 26 February, Rolls reported a 28.8% jump to £3.46bn.

Erginbilgic then upgraded 2026 targets, aiming for between £4bn and £4.2bn of underlying operating profit. He’s also aiming to lift free cash flow from £3.3bn in 2025 to between £3.6bn and £3.8bn. Barring shocks, he could beat those too. But we’re getting a big shock right now, in the Middle East.

Following the recent dip, Rolls-Royce’s price-to-earnings ratio has reduced from a dizzying 65, to what is still a gravity-defying 43. It’s better value than it was, but still really expensive.

Rolls-Royce is spinning many plates these days, but the bulk of its revenues still come from building engines for civil aircraft. Or rather, from the maintenance contracts attached to them, which are based on miles flown. As today’s conflict locks down Middle Eastern hubs, revenues could take a knock.

This stock market is volatile

That seen as bad news for British Airways owner International Consolidated Airlines Group, and I can’t see it as anything but a threat to Rolls-Royce as well.

Of course Rolls has a Defence division too, which may benefit from the current conflict, while its Power Systems operation has a huge opportunity as artificial intelligence companies roll out their data centres. On the other hand, if we’re in an AI bubble, that could suddenly implode.

There’s also a huge new growth opportunity in small modular reactors. Today’s rocketing oil price could make those so-called mini-nukes look even more attractive. It will take time for the revenues to roll in though. If they ever do.

There’s so much to like about Rolls-Royce. It’s worth considering with a long-term view, but it’s not the first stock I’d buy in today’s uncertainty. If it falls only slightly short of today’s ultra-high expectations, the shares could take an outsized hit. I’ll hold what I’ve got, but I think investors can now find more exciting growth opportunities on the FTSE 100.