IT Stocks Analyzed: A New Outlook

Changes in US visa rules could affect technology companies. President Trump announced a $100,000 fee for new H-1B visas. This could cause some stocks to drop in value, especially if companies rely heavily on these visas.

Key Points

• New visa fee impacts IT company stock prices.
• Stocks likely to fall 3-5% initially.
• Companies explore alternative workforce locations like Canada/Mexico.
• Negotiations between India & US could change the outlook.
• Investor strategy: Buy if stocks drop 20% or more.
• H-1B visa applications have significantly decreased over time.

Many technology companies depend on the H-1B visa to bring skilled workers to the United States. Because of this new rule, some stocks could lose value. Companies that use these visas a lot might fall between 3 and 5 percent in price.

Analyst G Chokkalingam believes the situation is temporary. He thinks there could be a solution through trade talks between India and the United States. Until then, he recommends investors avoid IT stocks.

However, there’s some good news. A clarification from the US government says that H-1B petitions filed before September 21st won’t be affected, and those already in the US on H-1B visas don’t have to pay the fee. This gives companies time to think about different ways to manage their staff.

Companies are also relying less on the H-1B visa than they used to. In the last decade, Indian IT companies have reduced their use of these visas. Only about 20% of their employees work directly on-site in the US, and only 20-30% of those are on H-1B visas.

The number of H-1B visa applications has decreased, falling from 42,671 in 2017 to 20,870 in 2024. This shows that fewer people are seeking these visas.

Investors should carefully consider the risks and potential rewards before investing in IT stocks during this uncertain time.