It might be time for Tesla CEO Elon Musk’s own fork in the road.  

The electric carmaker is set to report quarterly earnings Tuesday afternoon that may say a lot about which direction Musk and the company he has ridden to immense wealth will go next.  

The company will update investors on revenue, profit and other key figures after months of turmoil as Musk continues to dedicate a large portion of his time to the Trump administration’s attempt to radically remake the federal government, far away from his corporate responsibilities at Tesla, SpaceX and his other companies. 

With Tesla’s stock and brand reputation getting pummeled — and with President Donald Trump’s tariff policy threatening to upend the automotive market, Tesla included — many Tesla investors have called on Musk to scale back or end his government work entirely and return his focus to business.  

The Trump administration has sent “fork in the road” emails encouraging federal workers to consider quitting their jobs.  

Even some of Tesla’s loudest proponents, such as Daniel Ives, managing director at Wedbush Securities, have lost patience with how Musk is dividing up his attention.  

“This is a moment of truth for Musk,” Ives told NBC News. “If he picks staying with DOGE and the Trump White House, the future of Tesla could be negatively altered permanently. The brand damage he’s created by being part of the Trump administration has already been a devastating blow to Tesla’s reputation, stock and confidence. … He’s made Tesla into a political symbol, which is one of the worst things that can happen to a consumer brand.” 

DOGE refers to the Department of Government Efficiency, Musk’s team of staffers spread throughout the executive branch helping to order spending cuts. Musk is a “special government employee” who’s expected to leave the Trump administration at some point, but with no set date to depart. 

Musk and Tesla didn’t immediately respond to a request for comment Monday afternoon on whether he is stretched too thin and, if so, what they might do about it.  

Tesla is due to report earnings after the market closes. It also is scheduled to host a conference call with Wall Street analysts, and Musk sometimes joins the calls.  

Several possible paths lie ahead for Musk and Tesla, and it’s not clear which is most likely. Musk could scale back or end his White House job and spend more time at Tesla. Or he could quit as Tesla CEO and keep his focus on politics, putting the company’s future and brand in someone else’s hands.  

The status quo may also endure, with Musk continuing to bet that he has enough attention for everyone.  

Tesla’s stock price has provided a snapshot of the tumultuous run since Musk threw himself into the Trump administration. While its stock price is almost even with where it traded in the days ahead of the election, its shares are down more than 50% from their December peak. Still, Tesla’s total market cap remains just above $700 billion, well above those of its auto industry competitors but below those of major tech companies. 

On Monday, Tesla shares plunged again ahead of the earnings report, falling 5.8%.  

Tuesday will mark Tesla’s first earnings report since the full extent of Musk’s government role and ambitions became clear. Tesla last reported on its financials on Jan. 29, early in Trump’s second term.  

In the past year, Musk has somewhat aggressively started to pivot Tesla into new possible lines of business, including a proposed Cybercab autonomous vehicle and a potential robotic humanoid called Optimus, although the company hasn’t shipped either of those products and some on Wall Street are skeptical that they’ll be successful.  

In a note to clients, Wells Fargo stock researchers said they expected to hear more from Tesla on Tuesday about Cybercab and Optimus, but they called those subjects “razzle dazzle” that “distract from fundamentals.” Wells Fargo has a price target of $130 a share for Tesla, far below the $227.50 close on Monday and near the low end of analyst price targets, according to The Wall Street Journal.  

Tesla has already issued warning signs about its health. It reported April 2 that vehicle deliveries in the first quarter declined 13% from a year earlier, battered by rising competition and fallout from Musk’s involvement in politics.  

Hundreds of protests at Tesla showrooms have also weighed on the company. Under the banner of a “Tesla Takedown,” opponents of Musk and Trump’s government policies have targeted the company to try to gain leverage over Musk, and demonstrators have continued to swarm Tesla locations, especially on weekends.  

Allen Adamson, a co-founder of Metaforce, a marketing and brand consultancy, said that if any other corporation faced a similar image problem, the board of directors might have stepped in to switch out the CEO. But Tesla’s board is famously close to and supportive of Musk.  

Now, Adamson said, Tesla faces risk whichever path it and Musk follow.  

“Musk is the magic that has fueled the stock price,” he said. “If he steps aside [as Tesla CEO], he takes the rocket fuel out of the Tesla stock price, but if he stays, he’s equally damaging the company’s prospects.”  

One unknown factor is how much of the damage to Tesla’s brand is permanent. In other words: If Musk were to leave the White House and return to business, would there be any improvement in the brand’s public esteem?  

Ives said it’s hard to measure the damage Tesla has sustained.  

“It’s taken on a life of its own that he never expected — this has become something bigger and much more of a raging fire than he ever expected around Tesla,” he said. “He sells a consumer brand globally, and the demand destruction … you can’t wear rose-colored glasses about it, and to not see it would be smoke and mirrors.” 

If Musk does turn his attention back to politics, he’d still have an enormous challenge to rebuild the company’s reputation, Adamson said. He said that Musk would need to stop other polarizing behavior, such as posting on X about controversial topics, and that he would have to improve the company’s innovation. Tesla has launched only one new consumer vehicle since 2020, and that product, the Cybertruck, isn’t widely popular. 

“I don’t think he can pull a rabbit out of a hat fast enough to prevent a continued spiral down,” Adamson said.

Tech billionaire Elon Musk said Tuesday that he will begin dedicating more time to Tesla and less to his work with the Trump administration starting next month, providing a relief to Tesla investors fed up with his political work and signaling a possible shift in power at the White House.

Musk’s comments came on Tesla’s call with investors following the company reporting a sizable drop in first-quarter profit and revenue. The company warned that the political environment along with the Trump administration’s tariff plans were challenges for its business.

‘Starting probably next month, May, my time obligation to DOGE will drop significantly,’ Musk said, referring to his Department of Government Efficiency.

‘I think I’ll continue to spend a day or two per week on government matters for as long as the president would like me to do so, and for as long as it is useful, but starting next month, I’ll be allocating far more of my time to Tesla, now that the major work of establishing the Department of Government Efficiency is done,’ he said.

Musk, the CEO of Tesla, has faced a swell of opposition for his work with President Donald Trump, which has made Tesla a growing target for protests and even vandalism. Musk has acknowledged that his move into politics has hit the company’s stock price.

Tesla — which is increasingly trying to diversify into high-tech products like robots — said profits fell 71% to $409 million, compared with $1.39 billion during the same quarter one year ago.

Shares of Tesla were up about 4% in after-hours trading, though the company has lost 50% of its value from its mid-December peak.

The White House did not immediately respond to a request for comment on Musk’s announcement.

Musk reiterated on the call that he intends to pivot Tesla from its established electric car business into two new products: robotaxis and humanoid robots, two ideas that investors have been skeptical about.

Musk said that Tesla was still on track to begin selling robotaxi rides in Austin, Texas, in June, putting Tesla into head-to-head competition with Google spinoff Waymo, which launched robotaxi rides there in March via the Uber app. 

Tesla, in its written earnings report, said that ‘uncertainty in the automotive and energy markets’ associated with ‘rapidly evolving trade policy,’ along with ‘changing political sentiment,’ could have ‘a meaningful impact on demand for our products in the near-term.’

It also said updates to its best-selling Model Y that affected its availability on the market contributed to the shortfall.

‘We remain committed to expanding our business model to include delivering autonomous robots across multiple form factors and use cases — powered by our real-world AI expertise — to our customers and for use in our factories, as we navigate these headwinds,’ it said.

It said it was not prepared to provide guidance for performance the rest of the year — a decision other companies are also making — because of broad trends that include the impact from tariffs. Tesla has boasted that is ‘the most American-made’ car, but it still faces tariff exposure due to imported parts.

It said it would ‘revisit’ guidance for 2025 in three months.

‘It is difficult to measure the impacts of shifting global trade policy on the automotive and energy supply chains, our cost structure and demand for durable goods and related services,’ Tesla said in the outlook section of its report.

Musk, on the conference call, said he pressed Trump to reverse course on his tariff policy but was not successful.

‘I’m one of many advisers to the president. I’m not the president, but I’ve made my opinion clear to the president,’ he said. ‘I’m an advocate of predictable tariff structures.’

Musk has faced pressure from many sides, including from investors who would like him to pay more attention to the company and from his job in the Trump administration, where he has volunteered to slash government programs.

Musk has kept his CEO roles at Tesla and SpaceX even while he has spent much of his time with President Donald Trump and his Department of Government Efficiency, the group charged with reducing federal spending. 

A CNBC All-America Economic survey released earlier Tuesday underscored the depth of the negative sentiment toward Tesla and Musk: 47% of the public had negative views of the company versus 27% positive, and half had negative views of Musk, compared with 36% who saw him positively.

‘Tesla has become a political symbol around the world,’ Daniel Ives, managing director at Wedbush Securities, said in an interview on CNBC after the earnings report was released.

Ives said the political controversy has hurt Tesla not only by reducing demand for vehicles but also because Tesla has become a target for retaliatory tariffs by other nations, such as China.

The earnings report did not explicitly mention the repeated vandalism against Tesla vehicles or the peaceful protests at its showrooms, instead citing the ‘changing political sentiment’ as a headwind for demand.

A key question for Tesla, Musk and the Trump administration has been how long Musk will remain in his White House position. His job as a “special government employee” is time-limited by law to 130 days during any period of 365 consecutive days, which could put his legally mandated endpoint as early as late May. Musk told Fox News this month that he believed “most” of his work would be done by the deadline. 

The top producer at CBS’ “60 Minutes” announced Tuesday he would step down from the newsmagazine because he had lost his journalistic independence.  

“Over the past months, it has … become clear that I would not be allowed to run the show as I have always run it,” Bill Owens said in a memo to staff members, which was obtained by NBC News. “To make independent decisions based on what was right for ‘60 Minutes,’ right for the audience.” 

“So, having defended this show — and what we stand for — from every angle, over time with everything I could, I am stepping aside so the show can move forward,” Owens added.  

Owens’ departure comes during a tumultuous chapter for “60 Minutes.” President Donald Trump has sued CBS for $10 billion over an October interview with then-Vice President Kamala Harris that the president claims was deceptively edited. The network has denied that claim. 

Trump amended the lawsuit earlier this year, upping his damages claim to $20 billion.

“Former President Donald Trump’s repeated claims against ‘60 Minutes’ are false,” CBS News said in a statement in October. “The interview was not doctored” and the show “did not hide any part of Vice President Kamala Harris’s answer to the question at issue.”  

In a separate statement, “60 Minutes” said it gave an excerpt from its interview with Harris to the Sunday morning program “Face the Nation,” which used a longer section of the former Democratic presidential candidate’s answer to a question.

“Same question. Same answer. But a different portion of the response. When we edit any interview, whether a politician, an athlete, or movie star, we strive to be clear, accurate and on point,” the statement said. “The portion of her answer on 60 Minutes was more succinct, which allows time for other subjects in a wide ranging 21-minute-long segment.”  

Trump has repeatedly lambasted the venerable newsmagazine over its reporting on him and his administration.  

In a post on Truth Social on April 13, for example, Trump wrote: “Almost every week, 60 Minutes … mentions the name ‘TRUMP’ in a derogatory and defamatory way, but this Weekend’s ‘BROADCAST’ tops them all.” He appeared to take issue with segments about the war in Ukraine and his interest in acquiring Greenland.  

Trump added that he believed CBS should lose its broadcast license and “pay a big price.” He said he hoped Federal Communications Commission Chairman Brendan Carr would “impose the maximum fines and punishment.”   

Owens’ exit, first reported by The New York Times, also comes at a pivotal moment for CBS’ parent company, Paramount. Shari Redstone, Paramount’s controlling shareholder, reportedly needs the Trump administration to approve her media conglomerate’s sale to Skydance Media, a production and finance company run by David Ellison, the son of tech mogul Larry Ellison. 

The New York Times reported in late January that Paramount was in settlement talks with Trump. The Times later reported that Owens told staff members he would not apologize for the Harris interview as part of any prospective settlement. NBC News has not independently verified either report. 

In his memo to staff, Owens said “60 Minutes” would “continue to cover the new administration, as we will report on future administrations. We will report from war zones, investigate injustices and educate our audience. In short, ‘60 Minutes’ will do what it has done for 57 years.”  

“Thank you all, remain focused on the moment, our audience deserves it,” Owens said in closing.  

Wendy McMahon, president and CEO of CBS News, notified company employees by email that Owens would be leaving and touted his work at the company.

“Tom and I are committed to 60 Minutes and to ensuring that the mission and the work remain our priority,” McMahon said, referring to CBS News president and executive editor Tom Cibrowski. 

RTX and GE Aerospace expect a more than $1 billion impact combined from President Donald Trump’s tariffs on imported goods and materials, the latest sign of higher prices for major U.S. manufacturers that rely on a global supply chain.

Neil Mitchill, chief financial officer of defense contractor and commercial aerospace supplier RTX, said on an earnings call Tuesday that the company will likely take a $850 million hit this year from tariffs, including the sweeping 10% levies that Trump imposed earlier this month alongside higher duties on countries like China and separate taxes on imported steel and aluminum.

That estimate doesn’t include RTX’s own tariff mitigation measures, Mitchill said.

GE Aerospace, which makes engines for popular Boeing and Airbus planes, kept its 2025 earnings outlook in place during its quarterly report Tuesday and said it would seek to save about $500 million by cutting costs and raising prices.

GE Aerospace CEO Larry Culp said on Tuesday’s analyst call that he recently met with Trump and discussed the U.S. aerospace sector’s trade surplus. GE has a joint venture with France’s Safran to make popular airplane engines.

The new tariffs are a shift for a global industry that has enjoyed mostly duty-free trade for decades.

“All we have suggested is the administration works through a myriad of issues, is they can consider the position of strength that the country enjoys as a result of this tariff-free regime,” Culp said.

The White House didn’t immediately comment.

Boeing, a major customer of both companies and the top U.S. exporter, is scheduled to report quarterly results before the market opens on Wednesday.

Airlines have recently announced cuts to U.S. domestic capacity plans this year because of softer demand, but executives have emphasized it is hard to predict the direction of the economy or future trade policies. United last week provided two earnings outlooks for 2025, one in the event of a recession, one assuming status quo.

“There is uncertainty,” Culp said Tuesday. “None of us, I think, know for sure how this plays out.”

Chipotle Mexican Grill will open its first location in Mexico early next year as the latest stage in its international expansion.

The company announced Monday that it has signed a development agreement with Alsea, which operates Latin American and European locations of Starbucks, Domino’s Pizza and Burger King, among other chains.

After the initial restaurant opens in 2026, Chipotle plans to explore “additional expansion markets in the region,” which could mean broader Latin American development.

The deal to expand in Mexico comes as President Donald Trump wages a trade war with the country, straining the relationship between the two neighbors. Avocados from Mexico were originally subject to a 25% tariff until he paused new duties on goods compliant with the United States-Mexico-Canada Agreement. While Chipotle has diversified its avocado sourcing in recent years, it still imports about half of its avocados from Mexico.

In recent years, Chipotle has been trying to expand internationally, after decades focusing almost entirely on its U.S. business. The company operates 58 locations in Canada, 20 in the United Kingdom, six in France and two in Germany. Chipotle also currently has three restaurants in Kuwait and two in the United Arab Emirates through a deal with Alshaya Group.

Chipotle is betting that Mexico’s familiarity with its ingredients and appreciation for fresh food will win over consumers, according to a statement from Nate Lawton, Chipotle’s chief business development officer.

But U.S. interpretations of Mexican food don’t always resonate in the market; Yum Brands’ Taco Bell has twice attempted to expand into Mexico, but both efforts failed quickly.

Netflix executives messaged Thursday that all is well with the business in the face of economic turbulence. But its full-year outlook tells a slightly more nuanced story.

Netflix posted a big beat on operating margin for the first quarter, reporting 31.7% compared with the average estimate of 28.5%, according to StreetAccount. And it guided well above analyst estimates for the second quarter — 33.3% against an average estimate of 30%.

By its own phrasing, Netflix was “ahead” of its own guidance for the first quarter and is “tracking above the mid-point of our 2025 revenue guidance range.”

Still, Netflix declined to alter any of its longer-term projections. That suggests Netflix isn’t quite as confident in its second half.

“There’s been no material change to our overall business outlook since our last earnings report,” Netflix wrote in its quarterly note to shareholders.

U.S. consumer sentiment is at its second-lowest level since 1952 as President Donald Trump’s new tariff policies roil markets.

Co-CEO Greg Peters noted during the company’s earnings conference call that Netflix has, in the past, “been generally quite resilient” to economic slowdowns. Home entertainment provides a cheaper form of leisure than most other activities. A monthly Netflix subscription with ads costs $7.99.

But the question remains how — or whether — an economic slowdown would pinch Americans’ wallets and force higher churn among streaming subscriptions.

Netflix stopped reporting quarterly subscriber numbers this quarter, so the company will likely not detail if it sees a customer slowdown later this year beyond reporting its underlying revenue and profit.

First-quarter revenue of $10.5 billion was roughly in line with analyst expectations, while second-quarter guidance of $11 billion is slightly above.

“Retention, that’s stable and strong. We haven’t seen anything significant in plan mix or plan take rate,” said Peters. “Things generally look stable.”

Nintendo on Friday announced that retail preorder for its Nintendo Switch 2 gaming system will begin on April 24 starting at $449.99.

Preorders for the hotly anticipated console were initially slated for April 9, but Nintendo delayed the date to assess the impact of the far-reaching, aggressive “reciprocal” tariffs that President Donald Trump announced earlier this month.

Most electronics companies, including Nintendo, manufacture their products in Asia. Nintendo’s Switch 1 consoles were made in China and Vietnam, Reuters reported in 2019. Trump has imposed a 145% tariff rate on China and a 10% rate on Vietnam. The latter is down from 46%, after he instituted a 90-day pause to allow for negotiations.

Nintendo said Friday that the Switch 2 will cost $449.99 in the U.S., which is the same price the company first announced on April 2.

“We apologize for the retail pre-order delay, and hope this reduces some of the uncertainty our consumers may be experiencing,” Nintendo said in a statement. “We thank our customers for their patience, and we share their excitement to experience Nintendo Switch 2 starting June 5, 2025.”

The Nintendo Switch 2 and “Mario Kart World″ bundle will cost $499.99, the digital version “Mario Kart World” will cost $79.99 and the digital version of “Donkey Kong Bananza” will cost $69.99, Nintendo said. All of those prices remain unchanged from the company’s initial announcement.

However, accessories for the Nintendo Switch 2 will “experience price adjustments,” the company said, and other future changes in costs are possible for “any Nintendo product.”

It will cost gamers $10 more to by the dock set, $1 more to buy the controller strap and $5 more to buy most other accessories, for instance.

Retailer Best Buy said Friday that it will also begin accepting preorders for the Nintendo Switch 2 console, games and accessories on April 24.

The company said that for the first time in six years, most of its stores will open at midnight for the official launch day, June 5, so that customers can “get their hands on their new Switch 2 immediately.”

Capital One Financial’s application to acquire Discover Financial Services in a $35.3 billion all-stock deal has officially been approved by the Federal Reserve and the Office of the Comptroller of the Currency, the regulators announced on Friday.

“The Board evaluated the application under the statutory factors it is required to consider, including the financial and managerial resources of the companies, the convenience and needs of the communities to be served by the combined organization, and the competitive and financial stability impacts of the proposal,” the Fed said in a release.

Capital One first announced it had entered into a definitive agreement to acquire Discover in February 2024. It will also indirectly acquire Discover Bank through the transaction, which was approved by the Office of the Comptroller of the Currency on Friday.

Under the agreement, Discover shareholders will receive 1.0192 Capital One shares for each Discover share or about a 26% premium from Discover’s closing price of $110.49 at the time, Capital One said in a release.

Capital One and Discover are among the largest credit card issuers in the U.S., and the merger will expand Capital One’s deposit base and its credit card offerings. 

As a condition of the merger, Capital One said it will comply with the Fed’s action against Discover, according to the release. The Fed fined Discover $100 million for overcharging certain interchange fees from 2007 through 2023, and the company is repaying those fees to affected customers.

The OCC said it approved Capital One’s application on the condition that it would take “corrective actions” to remediate harm and address the “root causes” of outstanding enforcement actions against Discover.

After the deal closes, Capital One shareholders will hold 60% of the combined company, while Discover shareholders own 40%, according to the February 2024 release.

In a joint statement, Capital One and Discover said they expect to close the deal on May 18.

Alphabet’s Google illegally dominated two markets for online advertising technology, a judge ruled Thursday, dealing another blow to the tech giant and paving the way for U.S. antitrust prosecutors to seek a breakup of its advertising products.

U.S. District Judge Leonie Brinkema in Alexandria, Virginia, found Google liable for “willfully acquiring and maintaining monopoly power” in markets for publisher ad servers and the market for ad exchanges, which sit between buyers and sellers. Websites use publisher ad servers to store and manage their ad inventories.

Antitrust enforcers failed to prove a separate claim that Google had a monopoly in advertiser ad networks, she wrote.

Lee-Anne Mulholland, Google’s vice president of regulatory affairs, said Google will appeal the ruling.

“We won half of this case and we will appeal the other half,” she said in a statement, adding that the company disagrees with the decision about its publisher tools. “Publishers have many options and they choose Google because our ad tech tools are simple, affordable and effective.’

Google’s shares were down around 2.1% at midday.

The decision clears the way for another hearing to determine what Google must do to restore competition in those markets, such as sell off parts of its business at another trial that has yet to be scheduled.

The Justice Department has said Google should have to sell off at least its Google Ad Manager, which includes the company’s publisher ad server and ad exchange.

However, a Google representative said Thursday that Google was optimistic it would not have to divest part of the business as part of any remedy, given the court’s view that its acquisition of advertising tech companies like DoubleClick were not anticompetitive.

Google still faces the possibility that two U.S. courts will order it to sell assets or change its business practices. A judge in Washington will hold a trial next week on the Justice Department’s request to make Google sell its Chrome browser and take other measures to end its dominance in online search.

Google has previously explored selling off its ad exchange to appease European antitrust regulators, Reuters reported in September.

Brinkema oversaw a three-week trial last year on claims brought by the Justice Department and a coalition of states.

Google used classic monopoly-building tactics of eliminating competitors through acquisitions, locking customers in to using its products and controlling how transactions occurred in the online ad market, prosecutors said at trial.

Google argued the case focused on the past, when it was still working on making its tools able to connect to competitors’ products. Prosecutors also ignored competition from Amazon.com, Comcast and other technology companies as digital ad spending shifted to apps and streaming video, Google’s lawyer said.

The ruling was issued as a district court in Washington, D.C., held its fourth day of an antitrust trial between Meta and the Federal Trade Commission, in which the government similarly accused the company then known as Facebook of monopolizing the social networking market through its acquisitions of Instagram and WhatsApp.

A Google representative said the partially favorable ruling in its case Thursday could point to success for Meta, as well, in defending its acquisitions from the government’s antitrust allegations.

Harvard’s brewing conflict with the Trump administration could come at a steep cost — even for the nation’s richest university.

On April 14, Harvard University President Alan Garber announced the institution would not comply with the administration’s demands, including to “audit” Harvard’s students and faculty for “viewpoint diversity.” The federal government, in response, froze $2.2 billion in multi-year grants and $60 million in multi-year contracts with the university.

According to CNN and multiple other news outlets, the Trump administration has now asked the Internal Revenue Service to revoke Harvard’s tax-exempt status. If the IRS follows through, it would have severe consequences for the university. The many benefits of nonprofit status include tax-free income on investments and tax deductions for donors, education historian Bruce Kimball told CNBC.

Bloomberg estimated the value of Harvard’s tax benefits in excess of $465 million in 2023.

Nonprofits can lose their tax exemptions if the IRS determines they are engaging in political campaign activity or earning too much income from unrelated activities. Few universities have lost their non-profit status. One of the few examples was Christian institution Bob Jones University, which lost its tax exemption in 1983 for racially discriminatory policies.

White House spokesperson Harrison Fields told the Washington Post that the IRS started investigating Harvard before President Donald Trump suggested on Truth Social that the university should be taxed as a “political entity.” The Treasury Department did not reply to a request for comment from CNBC.

A Harvard spokesperson told CNBC that the government has “no legal basis to rescind Harvard’s tax exempt status.”

“The government has long exempted universities from taxes in order to support their educational mission,” the spokesperson wrote in a statement. “Such an unprecedented action would endanger our ability to carry out our educational mission. It would result in diminished financial aid for students, abandonment of critical medical research programs, and lost opportunities for innovation. The unlawful use of this instrument more broadly would have grave consequences for the future of higher education in America.” 

The federal government has challenged Harvard on yet another front, with the Department of Homeland Security threatening to stop international students from enrolling. The Student and Exchange Visitor Program is administered by Immigration and Customs Enforcement, which falls under the DHS.

International students make up more than a quarter of Harvard’s student body. However, Harvard is less financially dependent on international students than many other U.S. universities as it already offers need-based financial aid to international students in its undergraduate program. Many other universities require international students to pay full tuition.

The Harvard spokesperson declined to comment to CNBC on whether the university would sue the administration over the federal funds or any other grounds. Lawyers Robert Hur of King & Spalding and William Burck of Quinn Emanuel are representing Harvard, stating in a letter to the federal government that its demands violate the First Amendment.

Harvard, the nation’s richest university, has more resources than other academic institutions to fund a long legal battle and weather the storm. However, its massive endowment — which has raised questions during the recent developments — is not a piggy bank.

Harvard has an endowment of nearly $52 billion, averaging $2.1 million in endowed funds per student, according to a study by the National Association of College and University Business Officers, or NACUBO, and asset manager Commonfund.

That size makes it larger than than the GDP of many countries.

The endowment generated a 9.6% return last fiscal year, which ended June 30, according to the university’s latest annual report.

Founded in 1636, Harvard has had more time to accumulate assets as the nation’s oldest university. It also has robust donor base, receiving $368 million in gifts to the endowment in 2024. While the university noted that more than three-quarters of the gifts averaged $150 per donor, Harvard has a history of headline-making donations from ultra-rich alumni.

Kimball, emeritus professor of philosophy and history of education at the Ohio State University, attributes the outsized wealth of elite universities like Harvard to a willingness to invest in riskier assets.

University endowments were traditionally invested very conservatively, but in the early 1950s Harvard shifted its allocation to 60% equities and 40% bonds, taking on more risk and creating the opportunity for more upside.

“Universities that didn’t want to assume the risk fell behind,” Kimball told CNBC in March.

Other universities soon followed suit, with Yale University in the 1990s pioneering what would become the “Yale Model” of investing in alternative assets like hedge funds and natural resources. Though it proved lucrative, only universities with large endowments could afford to take on the risk and due diligence that was needed to succeed in alternative investments, according to Kimball.

According to Harvard’s annual report, the largest chunks of the endowment are allocated to private equity (39%) and hedge funds (32%). Public equities constitute another 14% while real estate and bonds/TIPs make up 5% each. The remainder is divided between cash and other real assets, including natural resources.

The university has made substantial portfolio allocation changes over the past seven years, the report notes. The Harvard Management Company has cut the endowment’s exposure to real estate and natural resources from 25% in 2018 to 6%. These cuts allowed the university to increase its private equity allocation. To limit equity exposure, the endowment has upped its hedge fund investments.

University endowments, though occasionally staggering in size, are not slush funds. The pools are actually made up of hundreds or even thousands of smaller funds, the majority of which are restricted by donors to be dedicated to areas including professorships, scholarships or research.

Harvard has some 14,600 separate funds, 80% of which are restricted to specific purposes including financial aid and professorships. Last fiscal year, the endowment distributed $2.4 billion, 70% of which was subject to donors’ directives.

“Most of that money was put in for a specific purpose,” Scott Bok, former chairman of the University of Pennsylvania, told CNBC in March. “Universities don’t have the ability to break open the proverbial piggy bank and just grab the money in whatever way they want.”

Some of these restrictions are overplayed, according to former Northwestern University President Morton Schapiro.

“It’s true that a lot of money is restricted, but it’s restricted to things you’re going to spend on already like need-based aid, study abroad, libraries,” Bok said previously.

Harvard has $9.6 billion in endowed funds that are not subject to donor restrictions. The annual report notes that “while the University has no intention of doing so,” these assets “could be liquidated in the event of an unexpected disruption” under certain conditions.

Liquidating $9.6 billion in assets, nearly 20% of total endowed funds, would come at the cost of future cash flow, as the university would have less to invest.

Harvard did not respond to CNBC’s queries about increasing endowment spending. Like most universities, it aims to spend around 5% of its endowment every year. Assuming the fund generates high-single-digit investment returns, spending just 5% allows the principal to grow and keep pace with inflation.

For now, Harvard is taking a hard look at its operating budget. In mid-March, the university started taking austerity measures, including a temporary hiring pause and denying admission to graduate students waitlisted for this upcoming fall.

Harvard is also issuing $750 million in taxable bonds due September 2035. This past February, the university issued $244 million in tax-exempt bonds. A slew of universities including Princeton and Colgate are also raising debt this spring.

So far, Moody’s has not updated its top-tier AAA rating for Harvard’s bonds. However, when it comes to higher education as a whole, the ratings agency isn’t so optimistic, lowering its outlook to negative in March.