Michael Burry of “The Big Short” fame said Tuesday he has no position in SpaceX, arguing that options used to wager against the stock remain too expensive even as he questioned the company’s nearly $3 trillion market value.

The investor, best known for predicting the U.S. housing collapse before the financial crisis, said he had reviewed several bearish options trades tied to SpaceX but ultimately passed on all of them.

“I am not involved with SpaceX now. Neither short nor, ahem, long,” he said in a SubStack post Tuesday.

A put option with a $100 strike price expiring in December 2028 was priced at about $25 per contract with the stock trading around $212, Burry said. A similar contract expiring in June 2027 cost roughly $13, while a December 2026 put traded around $6.75.

“Tempted by that one. But no thank you,” Burry said of the shorter-dated option. “With any luck SPCX will settle up here in the mid $200s and vol will drain out of put option chain.”

Still, Burry questioned the scale of the company’s valuation, describing SpaceX as “fundamentally a small space company, a niche telecom, a bedeviled social media company, and a Coreweave-light” generating less than $20 billion in annual revenue.

He argued the company’s market capitalization had reached levels that dwarf many established businesses and fortunes, noting that SpaceX is now worth more than Warren Buffett’s Berkshire Hathaway and exceeds the market value of many industries and national economies.

“Berkshire Hathaway has been eclipsed 2 1/2 times over in just three days. Berkshire Hathaway, painstakingly assembled over two century-old lives. The two greatest investors of our time,” Burry said.

The comments add to a growing debate over whether investors are assigning too much value to SpaceX’s businesses, which span launch services, satellite internet and social media, following one of the most closely watched public offerings in recent years.

Shares of SpaceX jumped 20% in their first full day of trading after a blockbuster debut, and they have since popped more than 25% week to date. The historic IPO minted Elon Musk as the world’s first trillionaire.

Last month, Burry urged investors to scale back exposure to surging technology stocks, saying investors should “reject greed” as enthusiasm around artificial intelligence and momentum-driven trades pushes valuations sharply higher. He has been warning for months that the stock market’s AI fixation increasingly resembles the final stages of the dot-com bubble. 

Shortly before the opening of Nasdaq trading on Friday, Elon Musk stepped in front of a cheerful crowd at SpaceX’s company town in Texas. His rocket maker was about to hit the public market at a valuation of around $2 trillion, instantly becoming the sixth most-valuable U.S. company.

Musk, weeks shy of his 55th birthday, told staffers that, in the early days of the company, he gave it “less than 10% chance of succeeding.”

“If people had told me this was going to happen, I was like, man, you must be smoking some really good crack,” said Musk, who founded SpaceX in 2002 and has grown it to 22,000 full-time employees. “Because I think this company is going to fail.”

Musk is now the world’s first trillionaire after his company pulled off the largest IPO on record, raising $75 billion, an amount roughly triple size of the next-biggest U.S. offering, which was Alibaba’s in 2014. There are 10 U.S. companies worth at least $1 trillion. Musk runs two of them.

Whatever uncertainty Musk professed to have felt when SpaceX was getting off the ground, he showed none of that in the days leading up to the IPO. In an abbreviated roadshow, SpaceX priced its IPO at $135 and told investors to take it or leave it. There was no price range used to gauge demand and no haggling with prospective shareholders.

That’s despite SpaceX having a fraction the revenue of any of tech’s megacaps and racking up a $4.9 billion loss last year, with total losses since its founding of over $41 billion. After the stock’s close on Friday, SpaceX was worth $2.1 trillion, giving it a multiple of 112 times last year’s revenue.

“This was not a deal that was priced based on market forces,” said Lloyd Greif, an investment banker with Greif & Co. in Los Angeles. “This was a deal based on what one man wanted. And when one man wants it, one man gets it, if that one man is Elon Musk.”

Meanwhile, all of those mentions of trillions and the trillionaire added fuel to the discourse surrounding wealth disparity as consumers deal with crippling inflation due largely to the war in Iran. Sen. Bernie Sanders of Vermont, a self-proclaimed Democratic Socialist, wrote on social media that Musk’s new status is a “call to action to take on the unprecedented income and wealth inequality that now exists.” And California Democratic Governor Gavin Newsom wrote on X, which is owned by SpaceX, that, “Americans are struggling to pay for groceries and gas while Elon Musk becomes a TRILLIONAIRE.”

Beyond the money, there are the AI concerns. Safe AI Now, a group of tech and faith leaders, erected an inflatable effigy of a shirtless Musk in Times Square seeking to draw attention to the company’s poor AI safety track record.

None of that dampened the mood on Wall Street, which has been desperate to see new offerings after a historically slow period of IPOs dating back to late 2021. In closing the day up 19% and consistently holding well above the offer price, SpaceX’s IPO lifted confidence in potential deals later this year from artificial intelligence model giants OpenAI and Anthropic, which are each valued at close to $1 trillion on the private market.

Former Nasdaq CEO Robert Greifeld said he “would definitely bet” that OpenAI and Anthropic will go public in 2026. Both companies announced this month that they confidentially filed IPO paperwork.

One big similarity between the two companies is that they’re founder controlled. But even there, SpaceX is on another level. At the time of Facebook’s IPO, CEO Mark Zuckerberg had the ability to control 56% of the voting power. For Musk at SpaceX, that number is above 82%.

Musk is certainly not alone in seeing a financial windfall from SpaceX’s IPO.

The offering pushed Alphabet’s stake past the $100 billion mark, after the company invested about $900 million in SpaceX in 2015. Valor Equity Partners, run by longtime Musk pal Antonio Gracias, is sitting on a stake worth over $80 billion, mostly owned by the firm’s clients.

In addition to the institutional investors, the IPO reportedly minted some 4,400 millionaires among the ranks of current and former SpaceX employees.

The stock sale was led by Wall Street heavyweights Goldman Sachs and Morgan Stanley, along with help from Bank of America, Citigroup, JPMorgan Chase and a long roster of other big banks and boutique firms. Underwriters gained access to additional shares, or their greenshoe overallotment, on one colorful condition.

“Only if the bankers all wore green shoes,” venture capitalist Steve Jurvetson, who invested in SpaceX in 2009, wrote in a post on X. Jurvetson included a photo of green and white Nike sneakers decorated with the company’s logo.

Throughout the morning, some of Musk’s top investors and good friends joined CNBC to talk about the historic event. Gracias was one of the guests.

The Valor founder and CEO said he met Musk more than 20 years ago through mutual friend David Sacks, a venture capitalist who until recently served as President Donald Trump’s AI and crypto czar. Gracias said he invested in PayPal “in the old days,” when Musk and Sacks were among the founding crew, and put early money into Tesla and SpaceX. In both cases, he said his firm worked “on hard problems to try and help these companies succeed.”

Gracias’ relationship with Musk extends beyond business. He spent some time last year working with Musk as part of the Trump Administration’s DOGE effort to slash the federal workforce, regulations and government spending. Gracias also previously sat on the boards of Tesla and other Musk companies. As for SpaceX, Gracias said he plans to hold onto the stock “as long as I possibly can.”

Sequoia partner Shaun Maguire, whose firm invested in SpaceX in 2019, called Musk a “generational entrepreneur,” likening his planned delivery of the Starship launch vehicle to the introduction of railroads. He said he was confident the company could be generating hundreds of billions of dollars in revenue in 2030.

Maguire said Sequoia will distribute some shares to investors “if we feel like the valuation is way ahead of its skis,” but said that, “as an individual, I’m going to hold my shares forever.”

“I love the incredible people of SpaceX beyond words,” he wrote.

WATCH: Cramer: Never has an IPO captivated Wall Street as much as SpaceX

Meta shares dropped more than 5% on Friday after the Financial Times reported that the company could potentially raise tens of billions of dollars in a stock offering to fund its artificial intelligence investments.

The social media company is pondering the potential stock sale, the FT reported, after rival Alphabet said this week that it plans to raise $85 billion from selling equity, increasing that number from $80 billion. Alphabet has been on a tear over the past year, but the stock is down for a fourth straight week as investors worry about excessive AI spending.

Meta hasn’t hired banks and may not issue new stock, the FT noted.

A Meta spokesperson called the report “pure speculation.”

“We’ve been clear that huge opportunities lie ahead in AI, and we’ll continue focusing on raising capital in the most flexible ways to support that,” the spokesperson said in an email.

Like other tech giants, Meta and Alphabet are pouring record sums into capital expenditures as they race to build out AI infrastructure to meet what they see as insatiable demand.

In April, Meta raised its 2026 capex guidance to as high as $145 billion from a previous forecast of up to $135 billion. Alphabet said that month that it was hiking the top end of its capex guidance by $5 billion to $190 billion.

Wall Street has been treating the two companies very differently over the past year, largely because Alphabet has a prospering cloud business that helps justify its hefty spending. Alphabet’s stock is up more than 115% in the last 12 months, topping all of its megacap peers, while Meta’s stock is down 13%, the worst performer in the bunch.

WATCH: Evercore’s Mark Mahaney: Meta is one of my favorite stocks in the large cap internet space.

Meta is once again trying to prove it can make money by doing something other than selling ads. It’s not a strategy that’s worked in the past, but CEO Mark Zuckerberg is betting artificial intelligence will bring better results.

The company said this week that it will begin testing two subscription services for its ChatGPT-like Meta AI app and website. Those paid offerings, available first in Singapore, Guatemala and Bolivia, coincide with the official release of premium subscription plans for Instagram, Facebook and WhatsApp, and higher-tier versions of its verification subscription service, which is designed to help businesses protect their brand.

Also this week, Zuckerberg said at Meta’s annual shareholder meeting that a potential cloud computing business is “definitely on the table,” a move that could eventually pit the company against Amazon, Microsoft and Google in cloud infrastructure.

Since Zuckerberg’s company, previously known as Facebook, began selling digital ads almost two decades ago, advertising has been its only real business. In its earnings report last month, Meta said that nearly 98% of its $56.3 billion in first-quarter revenue came from advertising. It’s a remarkably lucrative market, with some of the highest profit margins in the tech industry, and one Meta has long dominated in the U.S., alongside Google.

Meta just recorded its fastest growth rate for any quarter since 2021, showing that the online ad market is currently as robust as ever. But the rapid emergence of AI has raised questions about what happens if and when users turn to new interfaces for information and are no longer spending so much time on screens where they’re exposed to a constant barrage of links.

And when Meta has asked consumers and companies to open their wallets for anything other than ads, the answer has generally been no.

The 2018 debut of the Portal video-calling device was ultimately a bust and was taken off the market four years later. Meta’s $2 billion acquisition of virtual reality hardware startup Oculus in 2014 has yet to produce a breakout VR headset, resulting in the company’s Reality Labs unit racking up over $80 billion in operating losses since late 2020.

Reality Labs has shifted resources from VR to the more promising AI-powered smart glasses. The company is trying to capitalize on the surprise success of the Ray-Ban Meta glasses, in partnership with EssilorLuxottica, a notable exception for Meta in hardware.

Then there’s crypto. Zuckerberg jumped into the space in 2019 with a proposed cryptocurrency initiative called Libra. The effort faced intense regulatory scrutiny, resulting in the last remnant of the crypto project shuttering in 2022.

Trying to sell social media services to businesses has also been a struggle. In 2016, Facebook debuted its business-focused Workplace chat product, only to announce in 2024 that it would eventually close the service.

Chhabra noted that past efforts by companies like Verizon and CenturyLink to create cloud businesses out of their vast data center resources didn’t pan out.

“Historical evidences like telcos jumping in the cloud business hoping their capacity and network can bring business was proven wrong across geos and times,” Chhabra said.

WATCH: Meta launches Instagram, Facebook and WhatsApp subscriptions, with AI plans coming.

Meta CEO Mark Zuckerberg said his company could enter the cloud computing market if it overspends on data centers and ends up with excess capacity.

“It’s definitely on the table,” Zuckerberg said on Wednesday at Meta’s annual shareholder meeting, in response to a question about potentially competing with Amazon and Microsoft in cloud computing.

Zuckerberg reiterated comments made on an earnings call last year, noting that “almost every week there are different companies that come to us from outside asking us to both stand up an API service or asking if we have compute that they could buy from us at some premium to what we’ve bought it at.”

Of the four giant hyperscalers in the U.S. Meta is the only one that doesn’t have a cloud infrastructure and services business. Meanwhile, Meta’s spending to fuel artificial intelligence development is right up there with its rivals.

In April, Meta raised its 2026 guidance for AI-related capital expenditures to between $125 billion and $145 billion, up from a prior range of $115 billion to $135 billion. Meta shares sank 7% despite better-than-expected first-quarter earnings, underscoring concern about the company’s hefty AI spending.

Zuckerberg is reminding Wall Street that it has the ability to rent out some of its computing resources.

“We haven’t done that yet because we think that we have a use for the compute,” Zuckerberg said Wednesday. “Obviously if we get to a point where we feel that we have overbuilt, then that is an option that we have, and that is partially what gives us confidence in investing in building this out.”

Zuckerberg also discussed the company’s plans involving AI-powered personal assistants, an effort he briefly detailed in an April earnings call after the debut of Meta’s Muse Spark AI model.

“People will be more important in the future, not less, and as people inevitably want to get more out of these agents, there will be an opportunity to charge for premium or high compute versions,” Zuckerberg said.

Although Meta offers businesses some AI-related features on WhatsApp, those services are currently free. Zuckerberg said the company is working at “establishing a longer-term monetization model as well.”

Separately on Wednesday, Meta revealed that it will begin testing monthly subscription services for its Meta AI app and website, marking the first time the company will charge users for AI features. The Meta AI subscription plans will cost either $7.99 or $19.99 a month, depending on certain features, and will initially be available in Singapore, Guatemala and Bolivia.

Zuckerberg said at last year’s shareholder meeting that as Meta AI improves, the company could offer “a subscription service so that people can pay to use more compute.”

WATCH: Meta reshapes workforce as AI disrupts entry level hiring.

When Meta CEO Mark Zuckerberg told employees about his plan in late 2022 to lay off 11,000 employees, in cuts that would later expand to 21,000, he was contrite in admitting that he overhired during the Covid pandemic.

“I got this wrong, and I take responsibility for that,” Zuckerberg said in a message to staffers in November of that year as the company’s stock was in free fall. In early 2023, Zuckerberg said the cuts were necessary as part of Meta’s “year of efficiency.”

More than three years later, with the latest round of mass layoffs set to begin this week, the tone at the top has changed dramatically. Starting Wednesday, Meta is reducing its workforce by about 10%, or around 8,000 jobs. The company also scrapped plans to fill 6,000 open roles, according to a memo about the layoffs in April.

The current downsizing follows cuts of about 1,000 staffers in January in the company’s Reality Labs unit, and reductions in March impacting hundreds more workers, along with the decision to shift away from third-party vendors and contractors tasked with content moderation tasks.

Meanwhile, Meta is ramping up its investments in artificial intelligence, lifting its 2026 guidance for capital expenditures last month by as much as $10 billion, reaching as high as $145 billion.

In announcing the coming job cuts, a week before disclosing the capex increase, Meta told employees that the reductions are “all part of our continued effort to run the company more efficiently and to allow us to offset the other investments we’re making.”

There was no apology from Zuckerberg. Meta declined to comment for this story.

Internally, there’s an emerging sense of dread across wide swaths of the company, according to current and former Meta employees who asked not to be named in order to speak freely on the matter. That’s in part because more cuts are expected this year, including a potential round of layoffs in August, followed by another round later in the year, some of the sources said.

Finance chief Susan Li said during the first-quarter earnings call that executives “don’t really know what the optimal size of the company will be in the future.” Regarding AI investments, Li said, “our experience so far has been that we have continued to underestimate our compute needs even as we have been ramping capacity significantly as the advances in AI have continued and our teams continue to identify compelling new projects and initiatives.”

Across the tech industry, workers are watching as stock prices balloon and AI startups soar to monster valuations while employers are simultaneously cutting head count due to the rapidly emerging power of AI. So far in 2026, there have been almost 110,000 layoffs at 137 tech companies, according to Layoffs.fyi, after roughly 125,000 cuts all last year.

At the current pace, cuts could approach the peak in 2023, when there were more than 260,000 layoffs, as many software and digital media companies rightsized following the Covid hiring boom.

“The companies that will win in the AI era will be those with focus, urgency, and the discipline to continuously shift investment toward the areas where demand and long-term value creation are strongest,” Cisco CEO Chuck Robbins wrote in a blog post, titled “Our path forward.”

Cisco shares popped more than 13% on Thursday, their best day since 2011, after the company reported better-than-expected results and lifted its AI infrastructure guidance.

Wall Street still isn’t sold on Meta’s story, but that’s mostly because the company’s AI strategy has been scattered and remains largely in flux. The stock is down about 7% so far this year and almost 5% over the past 12 months, underperforming all of its megacap peers other than Microsoft.

Whatever anxiety investors are experiencing, the feelings inside the company are more intense, with some longtime staffers questioning Meta’s AI pursuits under AI chief Alexandr Wang, while also weighing if now is the time to leave for opportunities at other companies in the AI race, according to current and former employees.

Data aggregated by Blind, an anonymous professional network that requires users to verify their employment with a work email address, reveals some of the internal malaise.

Meta’s overall rating by employees on Blind has declined 25% from a peak in the second quarter of 2024 to the current period, with a 39% drop in its culture rating. In every category other than compensation, Meta has seen a ratings decline and dramatically underperforms rivals Amazon, Google and Netflix, the Blind data reveals.

The company’s full-court press with AI included the recent debut of an employee tracking tool intended to collect data from staffers’ actions, such as mouse movements and keystrokes on their work computers. The Model Capability Initiative, or MCI, as it’s called, is part of Meta’s efforts to train AI models to power digital agents that can perform various coding and white-collar tasks.

Employees have characterized the data tracking tool as “dystopian,” according to messages viewed by CNBC, with some workers expressing fear that personal information could be leaked. Some Meta workers have noted that their workplace computers appear slower since the company initiated the project, adding to their frustration, sources said.

Meta workers responded by creating an online petition that urges Zuckerberg and leadership to shutter the project.

“Collecting and repurposing this kind of data raises serious concerns around privacy, consent, and trust in the workplace,” the petition says. “It should not be the norm that companies of any size are permitted to exploit their employees by nonconsensually extracting their data for the purposes of AI training.”

Leo Boussioux, an assistant professor of information systems at the University of Washington’s Foster School of Business, described Meta as one of many companies currently overhauling its workforce and operations to accommodate “the fact that AI is changing the way we work.”

Boussioux said one goal could be to increase fear or pressure, using AI-related threats and layoffs as a “form of weapon to enable a culture change.” But, he said, it could also reflect “poor management that does not know how to enable this in a more comfortable way for the employees.”

— CNBC’s Stephen Desaulniers and Lora Kolodny contributed to this report.

WATCH: Meta’s overall numbers were impressive, says Jim Cramer.

Meta plans to lay off 10% of its workforce, equaling about 8,000 jobs, as it continues ramping up investments in artificial intelligence.

The cuts will begin on May 20, and the company is scrapping plans to hire people for 6,000 open roles, according to a Thursday memo to employees. Bloomberg was first to report on the layoffs.

Meta’s latest round of cuts follows several smaller job reductions that the company said was necessary to to improve efficiency while focusing its efforts on generative AI, where it’s lagged OpenAI, Google and Anthropic.

CNBC reported in January that Meta fired roughly 10% of employees who were working on metaverse-related projects. Roughly 1,000 people in the company’s Reality Labs unit were let go at that time.

Another round of layoffs commenced in March and affected hundreds of employees working in a variety of units, including Facebook, Reality Labs, global operations and sales. Meta also said last month that it would shift away from third-party vendors and contractors, which have historically handled content moderation tasks, in favor of relying on various AI technologies.

Job cuts are picking up across the tech sector as companies reckon with the AI boom. Microsoft confirmed on Thursday that it will offer voluntary buyouts to some U.S. employees, a first for the 51-year-old software giant. About 7% of U.S. employees are eligible, according to a person familiar with the plans who asked not to be named because the number isn’t being made public. 

In January, Amazon announced plans to eliminate about 16,000 corporate jobs, marking its second round of mass job cuts since last October.

Meta said in its latest annual report in January that it had a global workforce of 78,865 employees as of Dec. 31, down from 86,482 in late 2022 coming off a wave of hiring throughout the tech industry in the aftermath of the Covid pandemic. The company said in a 2021 annual report that its global workforce reached 58,604 employees as of December 31, 2020.

Meta CEO Mark Zuckerberg’s top effort is to bolster his company’s position in AI. Earlier this month, Meta debuted its first major artificial intelligence model since the costly hiring of Scale AI’s Alexandr Wang in June.

This week Meta revealed to staff that it’s using a new employee tracking tool called the Model Capability Initiative (MCI), intended to capture data from staff members using their work computers. The data, which includes employee keystrokes and mouse clicks, is needed to train AI agents, a Meta spokesperson said in a statement.

Meta is scheduled to report first-quarter earnings on Wednesday, along with fellow tech giants Alphabet, Amazon and Microsoft.

Meta shares fell 2.4% on Thursday and are now about flat for the year.

WATCH: Despite the energy shock, AI arms race set to keep capex spending elevated.

Elon Musk is seeking to have OpenAI CEO Sam Altman and President Greg Brockman removed from their roles as officers in the company as part of a case that’s expected to go to trial later this month.

In a legal filing on Tuesday, Musk’s lawyers laid out specific remedies their client is seeking if a judge and jury determine that Altman and OpenAI defrauded Musk, the world’s richest person.

Musk sued Altman and OpenAI in 2024, claiming the artificial intelligence company that he helped start almost a decade earlier “assiduously manipulated” and “deceived” him into donating $38 million, based on promises that the entity would remain a nonprofit. The two sides have since been embroiled in a public war of words, in addition to their legal battle and budding business rivalry.

“Plaintiff will seek an order removing Altman as a director from the OpenAI nonprofit board and removing both Altman and Brockman as officers of the OpenAI for-profit,” Musk’s lawyers said in Tuesday’s filing. “Removal of a charity’s officers and directors is a common remedy where those individuals fail to protect or carry out the charity’s public mission.”

Musk is also asking the court to make OpenAI revert to operating as an actual nonprofit, according to the filing. The company completed a restructuring in October, and is now run as a nonprofit with a 26% stake in the for-profit arm, which includes ChatGPT.

Jury selection for the case is slated to begin on April 27, in a federal court in Oakland, California.

Following Tuesday’s filing, OpenAI said in a post on X that Musk is “pretending to change his tune about attacking the nonprofit OpenAI Foundation.”

“The truth is that this case has always been about Elon generating more power and more money for what he wants,” OpenAI said. “His lawsuit remains nothing more than a harassment campaign that’s driven by ego, jealousy and a desire to slow down a competitor.”

Musk, Altman and others co-founded OpenAI as a nonprofit AI lab in 2015. Musk left OpenAI in 2018, after trying to convince executives there to merge it with Tesla, his electric vehicle company.

In 2023, Musk launched a competing company called xAI, which developed the AI image generator and chatbot Grok. In February, Musk’s SpaceX acquired xAI, which also owns X (formerly Twitter) in a deal that valued the combined entity at $1.25 trillion. SpaceX recently filed confidential paperwork with the SEC for what will likely be a record IPO.

On Monday, OpenAI sent a letter to the California and Delaware attorneys general, urging them to investigate “improper and anti-competitive behavior” by Musk and his associates ahead of the trial. In the letter, OpenAI strategy chief Jason Kwon alleged that Musk has been working to undermine OpenAI through various “attacks” on the company, including by “coordinating his efforts” with Meta CEO Mark Zuckerberg.

Musk’s attorneys previously said, in a January filing, that their client should receive up to $134 billion in damages from OpenAI ⁠and lead investor Microsoft, calling them “wrongful gains” that the companies had received as a result of his early work with and financial support of OpenAI.

In Tuesday’s filing, Musk’s lawyers said their client is seeking “to return all ill-gotten gains, including Microsoft’s, to the OpenAI charity.”

— CNBC’s Ashley Capoot contributed to this report.

WATCH: OpenAI is chasing Anthropic

CUPERTINO, Calif. — Nasdaq brought its market open festivities to Apple’s sprawling Silicon Valley headquarters on Tuesday, the eve of the company’s 50th birthday.

From a desk inside Apple Park, the ring-shaped campus that Steve Jobs spent his last years helping design, Tim Cook rang the opening bell and, in the process, ushered in the iPhone maker’s second half-century.

It was a celebratory occasion, but one arriving at a pivotal point for an iconic American company that faces major challenges today and in the years ahead as the technology industry gets swept up by artificial intelligence.

Prior to the AI boom, which started with the launch of OpenAI’s ChatGPT in late 2022, Apple was able to win by dominating the consumer device market and adding its Siri voice assistant across its product portfolio.

The pitch has always been simple: Pay a premium for a device, and trust that what happens on it stays yours, whether it’s messages, photos or notes. Personal data isn’t fuel for an advertising engine.

Two of Apple’s megacap tech peers took the opposite approach. Google and Meta are the giants of digital advertising, giving away their key services for free and making tens of billions of dollars a year in profit by targeting users with promotions.

Apple’s principle came from Jobs, its co-founder and longtime CEO. Cook, his successor, has been preaching it since becoming CEO in 2011, shortly before Jobs’ death. For much of Apple’s 50-year history, it’s been gospel in Cupertino.

That’s why Apple’s latest move feels so out of character.

In January, Apple struck a multiyear deal to use Google’s Gemini AI as part of a rebooted Siri. Google has already been paying in the range of $20 billion a year to be the default search engine on the iPhone. In AI, that relationship flips: Apple becomes the one paying for the underlying intelligence by licensing Google’s technology.

Money isn’t the main issue — Apple recorded net cash of $54 billion in the latest quarter and returned $32 billion to shareholders, mostly through buybacks. Rather, the concern, according to Asymco analyst Horace Dediu, is what the arrangement with Google means for user data and whether the search company uses it to bolster its algorithms.

“That’s where the wall has to be,” Dediu said. “That they don’t give that information to Google, and Google doesn’t get smarter and improve its core business because Apple is sharing information with them.” He added that, “To the extent that the intelligence improves, that should stay within Apple.”

Apple declined to make anyone available for this story, but CNBC spoke with former employees and people who spent decades studying the business. The general sentiment is that Apple is at a crossroads, caught between the ethos that shaped the company and a technological shift that’s forcing it to compete on unfamiliar ground.

Apple is in this quandary in part because, compared to its tech peers, the company has been slow to AI. The long-awaited AI update to Siri has faced delays, though Apple says it’s still coming by year-end. In 2024, the company launched Apple Intelligence, which includes image generators, text rewriters, the ability to summarize push notifications and an integration with ChatGPT. Consumer response has been mixed.

Where Apple has really bucked the trend is in keeping capital expenditures in check, rather than following the path of Amazon, Microsoft, Alphabet and Meta, which are collectively committing hundreds of billions of dollars a year to new AI infrastructure so they can support cutting-edge models and workloads.

As rivals were building giant model businesses, involving training through scraping of information and data, Apple steered clear, a decision that many in the industry say left the company at a disadvantage in generative AI.