US DOJ DEI Investigation Impact on Large Tech and Telecom Stocks

The Trump administration has conducted a comprehensive review of corporate Diversity, Equity, and Inclusion (DEI) policies through a series of executive orders and DOJ actions:

• DOJ Actions
  : On February 5, 2025, the Attorney General issued a memorandum directing the Civil Rights Division to “investigate, eliminate, and penalize” “unlawful DEI preferences, policies, programs, and activities” in the private sector and educational institutions [1][4]
• Legal Basis
  : The investigation is primarily conducted under the False Claims Act, focusing on federal contractors and grant recipients [4]
• EEOC Shift
  : The Equal Employment Opportunity Commission (EEOC) has shifted to a more conservative civil rights stance, prioritizing cases involving discrimination against white men [1]
• Investigation Targets
  : Large enterprises such as Google and Verizon have been listed as investigation targets [1]

• Recruitment and Promotion Practices
  : Review whether DEI policies violate federal anti-discrimination laws
• Federal Contractors
  : Special focus on enterprises receiving federal funding
• DEIA Programs
  : Diversity, Equity, Inclusion, and Accessibility programs

• Legal Review Fees
  : Companies need to hire external legal teams to conduct a comprehensive review of existing DEI policies
• Policy Revision Costs
  : Redraft recruitment, promotion, and training policies to align with the new legal environment
• Document Preparation Costs
  : Prepare a large number of relevant documents in response to the DOJ’s civil investigation demands
• Employee Training Costs
  : Train management and HR on new compliance requirements

• Under the False Claims Act, enterprises may face huge fines and damages
• Legal defense costs could reach millions of dollars
• Settlement or judgment costs may severely impact quarterly financial performance [4]

Based on financial analysis data [0]:

• A high debt risk classification means additional legal and compliance costs may put greater pressure on its financial condition
• As a telecom operator, Verizon relies more on federal contracts, hence facing stricter scrutiny
• Limited free cash flow may restrict its flexibility in responding to the investigation

Multiple large enterprises have taken actions:

• AT&T
  : Completely eliminated DEI recruitment quotas and disbanded DEI-focused positions in the HR department [5]
• Microsoft
  : Quietly stopped diversity reporting and adjusted its performance evaluation system [2][6]
• Google
  : Removed references to “diversity” and “equity” from its Responsible AI team page [6]
• T-Mobile
  : No longer has individual roles or teams focused on DEI [5]

1. Eliminate Quotas and Targets
   : Terminate recruitment quotas based on factors such as race and gender
2. Redefine Positions
   : DEI-related positions are reassigned or eliminated
3. Training Adjustments
   : Mandatory diversity and equity training is re-evaluated or canceled
4. Supplier Diversity
   : Stop or reduce diversity supplier network programs

• Talent Recruitment Challenges
  : 33% of companies report that recruiting diverse talent has become more difficult after DEI rollbacks [7]
• Brand Reputation Damage
  : Consumer and employee perceptions of the company may shift
• Employee Morale Impact
  : Existing employees may be confused about the company’s commitment to its values

• Google (GOOGL)
  : Stock price $313.51, -2.08% in the past month, but +65.50% year-to-date
• Verizon (VZ)
  : Stock price $40.48, -1.53% in the past month, +0.67% year-to-date

• Google
  : P/E ratio of 30.95x, reflecting market expectations for high growth
• Verizon
  : P/E ratio of 8.63x, indicating lower growth expectations and higher dividend yield

1. Regulatory Uncertainty
   : Ongoing legal reviews may dampen investor confidence
2. Increased Compliance Costs
   : Ongoing compliance expenses may impact profit margins
3. Brand Value Damage
   : Reputational damage may affect customer loyalty and revenue growth

1. Policy Clarity
   : Once the compliance framework is established, enterprises can operate more clearly
2. Operational Efficiency
   : Some companies may benefit from reduced bureaucratic processes
3. Improved Government Relations
   : Aligning with the government may help in securing contracts

• Strengths
  : Strong financial buffer ($3.78 trillion market cap), diversified revenue sources
• Risks
  : Facing regulatory scrutiny in multiple areas (antitrust, DEI, AI)
• Valuation
  : Current price is near the high end of the target range (target price $305), may face short-term adjustment pressure

• Strengths
  : Stable dividend yield, defensive characteristics as a telecom infrastructure provider
• Risks
  : High debt levels, limited financial flexibility, dependence on federal contracts
• Valuation
  : P/E ratio of 8.63x reflects that the market has already priced in some risks, but the DEI investigation may further impact valuation

• Wait-and-See Strategy
  : Wait for more information on the scope of the investigation and potential fines
• Focus on Disclosures
  : Closely monitor legal risk disclosures in companies’ 10-K and 10-Q filings
• Volatility Expectations
  : Stock prices may fluctuate when investigation news is released

• Google
  : Given its strong financial position and AI business potential, long-term investors may consider buying on dips
• Verizon
  : Need to closely monitor its debt management and cash flow status; remain cautious until the investigation results are clear

According to legal analysis, the current situation has the following characteristics [4]:

1. Ongoing Legal Challenges
   : Multiple executive orders face court challenges, increasing uncertainty
2. State-level Differences
   : Some states may continue to implement DEI policies, leading to compliance complexity
3. International Standard Differences
   : Multinational companies need to balance U.S. policies with DEI requirements from other countries

Adaptation strategies being adopted by leading enterprises:

• “Silent Return”
  : Some companies are quietly resuming DEI initiatives but avoiding public promotion [7]
• Repackaging
  : Redefine DEI goals using more neutral terms such as “talent acquisition” or “employee engagement”
• Data-driven
  : Use more quantitative metrics to prove the legitimacy of talent practices
• Legal Compliance Framework
  : Establish stricter compliance review procedures

1. Operating Costs
   : Legal and compliance costs have risen significantly, with a greater impact on companies with weaker financial conditions (e.g., Verizon)
2. Recruitment Strategies
   : Enterprises are widely adjusting DEI-related recruitment practices, which may affect talent acquisition and employee morale
3. Valuation Impact
   : Creates uncertainty in the short term, but long-term impact depends on the company’s financial strength and adaptability
4. Differentiated Impact
   :
   • Tech Stocks
     (e.g., Google): Have stronger financial buffers but face multi-dimensional regulatory pressure
   • Telecom Stocks
     (e.g., Verizon): Lower financial elasticity, higher dependence on government contracts, and greater risk exposure

• Short-term Caution
  : Recommend remaining cautious until the investigation results and fine scale are clear
• Long-term Perspective
  : Focus on the company’s fundamentals and adaptability; high-quality companies may create value opportunities after adjustments
• Industry Selection
  : Companies with strong financial conditions and low debt risk are better able to withstand regulatory pressure

[0] Jinling API Data - Financial Analysis, Stock Prices, Company Profile Data
[1] Economic Daily - “Trump Administration’s Anti-Corporate DEI Faces High Legal Threshold” (https://money.udn.com/money/story/10511/9223603)
[2] Reuters - “Corporate America faces DEI reckoning in 2026, EEOC chair says” (https://www.reuters.com/sustainability/society-equity/corporate-america-faces-dei-reckoning-2026-eeoc-chair-says-2025-12-19/)
[3] Brookings Institution - “Tracking regulatory changes in the second Trump administration” (https://www.brookings.edu/articles/tracking-regulatory-changes-in-the-second-trump-administration/)
[4] Mayer Brown - “United States: Employment – 2025 Highlights And 2026 Outlook” (https://www.mayerbrown.com/en/insights/publications/2025/11/united-states-employment-2025-highlights-and-2026-outlook)
[5] Telecoms.com - “AT&T becomes latest US telco to scrap DEI programmes” (https://www.telecoms.com/regulation/at-t-becomes-latest-us-telco-to-scrap-dei-programmes)
[6] Sustainability Mag - “Why Microsoft Has Scaled Back DEI in its Performance Reviews” (https://www.sustainabilitymag.com/news/why-microsoft-has-scaled-back-dei-in-its-performance-reviews)
[7] LinkedIn - “Impact of DEI Policy Changes on Business Growth” (https://www.linkedin.com/top-content/business-strategy/dei-in-corporate-strategy/impact-of-dei-policy-changes-on-business-growth/)
[8] USA Today - “These are the companies that rolled back DEI amid Trump backlash” (https://www.usatoday.com/story/money/2025/12/09/trump-dei-rollback-list-backlash/87457060007/)