Trump's $100,000 visa plan could hit these companies the hardest

President Trump's proposed $100,000 fee on new H-1B visas is expected to significantly impact technology and services firms, according to Baird's analysis. Infosys, with approximately 3,750 average annual approvals, and Cognizant Technology Solutions, with over 2,450 approvals, are identified as highly exposed, with Baird analyst David Koning estimating Cognizant could face a 25 basis point margin hit and 1.5% reduction in EPS. While Accenture is projected for a more modest impact, all three companies have seen significant year-to-date stock declines, though analysts generally maintain 'hold' or 'buy' ratings with substantial rebound potential.

Analysis

A proposed $100,000 fee on new H-1B visas introduces a significant cost headwind for technology and consulting firms, with the impact varying based on dependency. Baird's analysis indicates Infosys (INFY) has the highest exposure with approximately 3,750 average annual visa approvals, while Cognizant (CTSH), with over 2,450 approvals, is projected to see the most significant financial hit among its coverage group. Baird analyst David Koning estimates a potential 25 basis point impact on Cognizant's margins and a 1.5% reduction in EPS, a risk assessment echoed by Goldman Sachs. In contrast, Accenture (ACN) is expected to face a more modest impact of less than 5 basis points on margins and about 0.25% on EPS, owing to its lower approval volume of under 1,200. Despite these headwinds, all three companies have already seen substantial year-to-date share price declines of over 31% for ACN, 22% for INFY, and 11% for CTSH. This market reaction contrasts with LSEG consensus analyst ratings, which remain 'Hold' or 'Buy' and include price targets suggesting potential double-digit upside, implying a belief that the sell-off may be overdone or that long-term fundamentals are resilient.

Key Decisions for Investors

• Investors should quantify portfolio exposure to H-1B visa policy risk, recognizing that firms like Cognizant and Infosys face the most direct and material earnings and margin pressure.
• Consider that the significant year-to-date stock declines may have already priced in a portion of this regulatory headwind, potentially creating a valuation opportunity if the final policy impact is less severe than feared.
• Monitor upcoming earnings calls for specific management guidance on mitigation strategies and the quantifiable financial impact, as this will be critical for validating current analyst models.
• Evaluate Accenture as a potentially more defensive holding within the IT services sector, as its lower reliance on H-1B visas translates to a more modest and manageable estimated financial impact from the proposed fee.