Update 10/20/26:
Update 10/5/26: Deal is back through 10/7/26. Hat tip to reader RM
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Most arcades in the 1980s and ’90s had one. A glass box in the corner, stuffed with plush bears and off-brand cartoon characters, where you would throw away your money for the chance to claw at something you didn’t really want. The claw would drop, close on a bear’s head and lift it, then either lose its grip or hand you something else.
This is the impulse behind the “blind box” economy, the most visible piece of a trend marketers call “kidulting,” adults buying the toys, games and experiences of childhood for themselves. A new Harris Poll report, shared with Fortune ahead of its release, measures how far it has spread. In a survey of 2,158 U.S. adults conducted June 25–27, 80% said they’d done something playful for their own enjoyment in the past year. Among millennials who’d done something playful in the past year, 92% spent money on it and 78% spent $100 or more. Fifty-seven percent of Gen Z and millennials bought a blind box or mystery box for themselves, compared with 16% of Gen X and boomers.
“It’s got the same kind of psychological draw as a slot machine,” Libby Rodney, chief strategy officer at The Harris Poll, told Fortune in an interview. “It’s like a fun, physical lotto ticket that you can buy and then play with and then display.”
The blind box economy is the claw machine scaled to a generation. It sells small, affordable gambles on joy, wrapped in the characters of childhood.
Older millennials, born between 1978 and 1988 by BofA’s definition, spend more per customer on hobbies than any other generation, Fortune reported last month. BofA’s category covers arts and crafts, hobby shops, ski resorts, outdoor retailers, educational toys and some toy stores. It excludes video games, golf and travel, so it is not a direct measure of blind-box buying. In the three months through August, they spent a little more than twice what Gen Z did per customer, according to BofA card data, and a larger share of them have hobby spending than any other generation. Overall hobby spending rose 7.9% year-over-year in August, more than double the 3.4% growth in transactions.
Perhaps impressively, their free time is the shortest of any age group in BofA’s data. Americans ages 35 to 44 average about four hours and 15 minutes of leisure a day, the lowest of the age groups cited in the report. “Older Millennials seem to have more in common with younger Gen Xers than they do with Gen Z or even younger Millennials,” Bank of America Institute economist Joe Wadford previously told Fortune. The data can’t show how much of that money goes to their own collections versus their kids’ hobbies, but BofA says it likely reflects both.
Rodney sees a positive story in the numbers. “I see this as kind of Americans taking a deep exhale and wanting to play,” she told Fortune. It’s emerging as nothing less than a form of self-care in the nostalgia-soaked, screen-riddled economy of the 2020s.
Nostalgia is a big draw for millennials, the Harris survey found. Among millennials, 87% say they feel more emotionally connected to a brand when it taps into their childhood memories, and 86% appreciate it when brands make adult versions of things they loved as kids. Asked what makes a product feel designed for adults rather than kids, 39% of Americans picked “nostalgic references adults understand.”
A separate Harris survey for printing company Quad, released Oct. 14, found 68% of Americans collect at least one type of physical item, including toys and figures (26%) and trading cards (22%). The top reason was nostalgia, cited by 46%.
The toy industry has rebuilt itself around the grown-up buyer. Adult-only households accounted for 55% of U.S. toy sales in the first half of 2026, according to Circana, and that segment grew 16% through June. “At a demographic level, the toy industry’s growth continues to be fueled increasingly by older consumers,” Circana said, as reported by Retail Dive. Wall Street sees it in earnings, too. Hasbro reported Tuesday that revenue at Wizards of the Coast, home of Magic: The Gathering, rose 31% in the third quarter, and that Magic topped $600 million in quarterly revenue for the first time. Wizards produced $367 million of Hasbro’s $517 million in operating profit, according to its earnings release. Even Toys”R”Us, which liquidated its U.S. stores in 2018 after a 2017 bankruptcy filing, plans to open 120 new standalone stores this holiday season.
Arcades are coming back, too, Rodney said: claw-machine stores are opening in New York, Los Angeles and other big cities, Rodney said, with 20 or 30 machines on a single retail floor. “You spend like $70 for 20 minutes and get these mini toys,” she said. “It is a really fun, actually, relief.” Survey respondents describe a similar effect. Fifty-two percent of Americans, and 66% of Gen Z and millennials, call kidulting one of their main forms of self-care. Half of Americans said they’d rather buy blind boxes, build models or collect toys than talk to a therapist. “Therapy is expensive,” Rodney said, suggesting that kidulting “can give you that same kind of relief.” The survey measured what people prefer, not whether play works as a substitute for treatment.
Rodney also framed the trend as a backlash against the past decade’s grind and her own generation’s infamous tendency to work themselves to the bone. “We’ve moved away from hustle culture, and even if we hustle, we don’t talk about it anymore,” she said. People are pushing back against “optimization and maxing culture,” she said, and “the idea that everything we do has to be monetized.” Eighty-three percent of Americans agree that “in uncertain times, small moments of joy feel more important than ever,” and 74% say play makes them feel more hopeful when the world feels heavy. That rises to 80% among millennials.
Rodney also said there are some clearly healthy benefits to this trend. “I think a lot of this money is being redirected from bars and other things into play,” Rodney said. Fifty-three percent of Gen Z and millennials would rather do kidult things than go out for drinks.
The third draw is physical. After a decade of living through their phones, consumers want things they can touch. In the Quad survey, 84% of Americans said owning physical items feels more satisfying than owning digital ones, and 80% said they’re drawn to real-world experiences that don’t revolve around screens. Seventy-five percent said a simpler relationship with technology feels like a lifestyle upgrade, not a sacrifice.
Ernesto Pagano, global sector leader for media at Boston Consulting Group, sees the same shift in his firm’s research. “There is now a social stigma about spending too much time on screens,” he told Fortune. A recent BCG report led by Pagano estimates that “location-based entertainment,” the category that includes theme parks, has the highest revenue yield of any type of media, averaging $3.47 per hour of consumer time, about nine times video’s 39 cents. BCG also asked consumers which media they regretted spending time on, he said. Many named social media and gaming. “What you find is they don’t regret the experiences.”
Rodney said she thinks collecting is partly about proving you exist offline. Younger consumers, she said, “are just collecting things because they want to showcase that they have a physical presence in the world.”
Adults playing with toys used to be a punchline. Rodney pointed to The 40-Year-Old Virgin, the 2005 comedy whose hero’s action-figure collection was the joke. That was “basically making fun of kidulting,” she said. “Whereas now kidulting is mainstream. It’s cool.”
Some embarrassment lingers. Forty-nine percent of Americans, and 60% of millennials, sometimes feel judged for enjoying things considered childish. But only 12% say embarrassment stops them from spending more.
Critics see something darker. Author Keith Hayward, a University of Copenhagen criminologist, argued in his 2024 book Infantilised: How Our Culture Killed Adulthood that Western culture has stopped people from growing up. Rodney rejected the premise. “The idea that people can be multidimensional and have careers, mortgages and families and still want to play with Legos and go to theme parks isn’t a horrible thing,” she said. “There’s just so many more ways to adult in this world than we’ve ever imagined.”
There are daunting economics behind the retreat. The median first-time homebuyer in the U.S. is now 40, the oldest on record, and first-time buyers made up just 21% of purchases, a record low, according to the National Association of Realtors’ 2025 Profile of Home Buyers and Sellers. Fifty-one percent of millennials told Harris they’d rather spend on kidult things than save the money. Among everyone who plays, 46% said affordability makes them more likely to buy, second only to relaxation.
Generative AI was used for research assistance and/or transcription of this article. The reporter independently reported and verified the factual claims in this article, and a human editor reviewed it before publication.
More economists and traders expect the Bank of Canada to hike interest rates next week after the central bank’s latest surveys showed inflation expectations rising.
Should you bet on the world’s most iconic consumer device brand, or the company that builds the machines required to make them? Comparing Apple (AAPL -0.15%) and ASML (ASML +0.34%) reveals two different ways to play the tech sector.
Apple dominates the high-end consumer electronics market through a tightly integrated ecosystem of hardware and services. ASML provides the essential lithography equipment used by every major chip foundry to produce advanced semiconductors. While one interacts directly with billions of users, the other operates as a critical bottleneck in the global technology supply chain.
Apple generates revenue by selling consumer electronics like the iPhone while growing its services segment. Indirect distribution channels, including third-party cellular network carriers and resellers, account for roughly 60% of total net sales. The company also maintains a licensing arrangement with Alphabet (GOOG +0.96%) (GOOGL +1.05%) to offer search services on its various platforms.
In fiscal 2025, revenue reached nearly $416.2 billion, representing growth of approximately 6.4% over the prior year. Net income was close to $112 billion, yielding a net margin of 26.9%. This reflects a steady increase from the $93.7 billion in net income reported in fiscal 2024.
As of Apple’s September 2025 balance sheet, the company reported a debt-to-equity ratio of approximately 1.5. This indicates that total debt is 1.5 times shareholder equity. The current ratio of 0.9 suggests liabilities outpace liquid resources, while free cash flow reached roughly $98.8 billion in fiscal 2025.
ASML manufactures the lithography systems that enable chipmakers to print patterns onto silicon wafers. This equipment is vital for the production of advanced microchips used in everything from smartphones to artificial intelligence hardware. The company operates as a primary supplier to global semiconductor manufacturers and maintains more than 60 locations worldwide.
In fiscal 2025, ASML reported revenue of nearly $36.8 billion, a 15.6% year-over-year increase. Net income for the fiscal year reached $10.8 billion, resulting in a net margin of roughly 29.4%. This performance improved upon the 2024 fiscal year, when the company earned approximately $8.5 billion in net income.
As of ASML’s December 2025 balance sheet, the company maintains a debt-to-equity ratio of approximately 0.2. The current ratio stands at nearly 1.3, indicating the company has sufficient liquid assets to cover its upcoming liabilities. During fiscal 2025, ASML produced approximately $12.5 billion in free cash flow.
AAPL – Apple
$342.94
–0.15% (–$0.52)
ASML – ASML
$1,647.12
+0.34% (+$5.60)
AAPL – Apple
$342.94
–0.15% (–$0.52)
ASML – ASML
$1,647.12
+0.34% (+$5.60)
Market Cap
$5.0T
52wk Range
$243.42 – $348.15
Gross Margin
48.65%
P/E Ratio
39.31
EPS (TTM)
$8.72
Dividend & Yield
$1.06 (0.31%)
Market Cap
$635B
52wk Range
$946.11 – $1,999.96
Gross Margin
54.33%
P/E Ratio
40.53
EPS (TTM)
$40.60
Dividend & Yield
$9.08 (0.55%)
AAPL – Apple
$342.94
–0.15% (–$0.52)
Market Cap
$5.0T
52wk Range
$243.42 – $348.15
Gross Margin
48.65%
P/E Ratio
39.31
EPS (TTM)
$8.72
Dividend & Yield
$1.06 (0.31%)
ASML – ASML
$1,647.12
+0.34% (+$5.60)
Market Cap
$635B
52wk Range
$946.11 – $1,999.96
Gross Margin
54.33%
P/E Ratio
40.53
EPS (TTM)
$40.60
Dividend & Yield
$9.08 (0.55%)
Apple faces intense global competition in its primary hardware markets, which are characterized by aggressive pricing and rapid technological shifts. The company is currently subject to significant antitrust litigation, including an ongoing 2024 DOJ lawsuit regarding alleged monopolization. Furthermore, a heavy reliance on single-source suppliers in Asia makes the business vulnerable to geopolitical tensions and trade restrictions.
ASML operates in the highly cyclical semiconductor industry, where shifts in demand can lead to volatile spending by chip manufacturers. Because its lithography machines are essential and expensive, any delay in customer orders can significantly impact quarterly results. The company also faces geopolitical risks, as governments may impose export restrictions on advanced technology to certain countries.
Apple appears more attractive based on its sales multiple, though both companies trade at similar premiums relative to future earnings estimates.
| Metric | Apple | ASML Holding N.V. |
|---|---|---|
| Forward P/E | 35.8 | 36.3 |
| P/S ratio | 10.7 | 14.2 |
Valuation metrics include sourcing from Financial Modeling Prep (FMP) and may differ from other data providers.
The P/S ratio measures a company’s market value against its sales over the past 12 months.
Best to say it up front: I’m a longtime Apple shareholder, having bought my first shares in 2012. It’s my best-performing stock, and it’s not even close. So I’m a bit biased here; I obviously already think Apple is a great company, otherwise I wouldn’t still own shares.
I don’t think my investing thesis was particularly sophisticated. If memory serves, it was basically something along the lines of, “Shares look undervalued, seemingly everyone owns an iPhone, and I like my MacBook.” (Warren Buffett, I am not.)
That said, I find ASML’s positioning in the industry extremely appealing. Having a near-monopoly on the machines needed to manufacture the most advanced microchips is a great place to be. Its net margin compares favorably to Apple’s, and its valuation doesn’t seem unreasonable given its strong moat.
Now, turning to the historical data, Apple’s stock has absolutely crushed ASML shares over time:
AAPL data by YCharts
But that leads me to a final, perhaps counterintuitive point that I think is in ASML’s favor. Sure, Apple was a good investment for me in 2012, but we’re talking about 2026. The iPhone maker is one of the biggest companies in the world now, valued in the trillions. How much more growth can we expect Apple to have in the tank? The tech titan also got a new CEO recently, which is likely nothing too worrisome; a ham sandwich can probably run the company at this point. But former CEO Tim Cook presided over the stock’s incredible performance over the past 15 years, so any new person has really big shoes to fill.
This is a long way of saying that, between the two companies, Apple looks closer to a ceiling to me than ASML. Apple’s not going anywhere, to be clear. People will keep buying iPhones and MacBooks, and the company’s “walled garden” strategy will continue to grow and retain users. But I think if you’re looking for growth, ASML looks more attractive. That’s why I’d be more likely to buy shares of ASML here.
This article is presented by Proper Insurance.
You bought a short-term rental, told your insurance agent what you were doing at the property, and they sold you a policy. You paid for insurance. But the real question is, what does it cover?
Insurance has a reputation for hiding things in the fine print. That reputation is mostly unfair, as an insurance policy is a contract, and everything it will and will not do at the time of a claim is explained.
Nothing is hidden. You just have to know how to look for it. And the hard part is that many of the words on the policy overview page are familiar enough that they don’t feel like they need translating.
“Rental” feels broad enough to cover any kind of renting. “Premises liability” reads like enough coverage for a guest injury. “Loss of rents” sounds like the income you stand to lose. And “vacancy” sounds like the gap between peak seasons.
Every one of these words is more limited in definition than it reads at a glance because they’re exact on the insurance policy. The contract told you everything upfront. That means it’s on you to understand it.
You signed the policy contract. If it doesn’t work the way you expected, you’re the one who pays for it at the time of a claim.
Here’s what short-term rental insurance actually is, why a landlord policy can’t become a short-term rental policy, and what your insurance contract is actually telling you very clearly right now.
Short-term rental insurance is a commercial policy (CP) form built for a furnished property that’s rented out to paying guests on a nightly basis as a business. It contains commercial general liability (CGL) that follows your guests off the property.
You can buy insurance for a short-term rental, but that doesn’t mean you bought short-term rental insurance. While they both get called the same thing, they are not the same policy.
Think of it this way: You’re cooking in the kitchen. You ask your roommate or spouse for a knife. They glance over and see bread on your plate and hand you a butter knife.
That’s what you asked for. They saw what they thought you needed. What they didn’t see was the steak you’re cooking that you actually needed the knife for.
A butter knife and a steak knife are both knives. It’s the same word and drawer but different jobs. A butter knife simply won’t cut through a steak the way a steak knife was designed to.
Circling back, think of insurance the same way. “Short-term rental insurance” is a blanket term used for different policies. One is a policy designed for short-term renting. The other is just being used on a short-term rental.
Both get called the same name. Only one was made for the job.
Landlord insurance is written on a dwelling property (DP) form and built for a home that’s rented out to a tenant on a long-term lease. It was built for a specific setup: A tenant moves in, changes their mailing address, brings their own furniture, and usually carries their own renters insurance policy. As their landlord, you might not see them again until the lease ends.
Renting this way takes little day-to-day work. The form is built and priced around that.
DP insurance forms have existed for more than half a century, and they do that job well. But a short-term rental business asks a different question than the question this insurance form was written to answer. An easy way to think about this: Who cleans the tub?
In a long-term rental, the tenant lives there. They clean their own tub. If they slip on soap scum, that’s on them.
In a short-term rental, guests come and go every few days. You, or someone you hire, are cleaning the tub between every stay. If it’s not clean and a guest slips, that guest can hold you responsible. You’re the one who was supposed to take care of it.
A landlord isn’t in the property enough to carry that risk. And this is just one of many examples of why landlord insurance can carry less comprehensive liability coverage and lower liability limits in general. The exposure is far less.
A short-term rental host accesses the property constantly. Your policy should match the risk of the business you’re actually running.
It’s how a landlord policy ends up being called short-term rental insurance. You tell the carrier that you have a short-term rental, and they write it down on the policy. But that doesn’t change what the policy actually covers. It’s still built for the risks that match a long-term tenant and landlord relationship, not a host with short-term guests.
A carrier can know what you’re doing at the property and note it on the policy, but it’s still written on a dwelling property form. That usually means the carrier won’t deny a typical claim like a tree through the roof just because you run a short-term rental business at the location. It doesn’t mean the insurance form understands or addresses the risk your short-term rental creates. Or that they won’t limit that roof replacement to actual cash value (ACV)…but that’s another conversation.
Any policy on a rental property has three jobs:
Compare a landlord policy to how a short-term rental actually runs, and each coverage category is built for a quieter property: less activity, fewer people, and less of your contents in the building.
Landlord insurance typically includes “premises liability.” It’s designed to cover things that happen on your property.
A short-term rental creates liability that leaves the property all the time. The scenarios are endless:
You can picture the aftermath: A guest is injured out there, injures someone else, or causes damage to a neighboring property.
Premises liability included in landlord/dwelling policies ends at the property line. Your responsibility as the property owner does not. The risk crosses that line. And the lawsuit
lands in your mailbox.
Being named in a lawsuit is not the same as being at fault. You get named because the guest stayed at your property. Either way, you have to pay to defend yourself. If your policy doesn’t include guest accidents or incidents in the coverage, the legal fees and settlement costs come out of your pocket.
In a long-term rental, the tenant brings their own furniture. Their things are theirs, often insured under their own renters insurance policy. A standard landlord form expects the building to be mostly empty.
When it comes to a short-term rental, the furnishings are often what sets your property apart. You furnished every square foot of your property: the mattresses, the couch, televisions, kitchen, hot tub cover, and decor you spent months finding. All of it is yours, and it’s being used by every group of guests that checks in.
Landlord forms may respond to theft resulting from a break-in—someone forces a door open and empties the house. If a guest with a valid check-in code brings a truck and empties the house, that’s different. You let them in. The same logic applies to destruction: A landlord policy wasn’t built to cover a guest wrecking the place.
Most property owners and investors choose short-term renting over long-term in the first place because it’s far more lucrative. If your property has a covered loss, you’ll want your income coverage to match your business model.
A landlord form carries loss of rents, calculated on fair market rent for comparable properties in the area. The problem is that it values your income like a landlord’s income, because after all, a landlord policy is what you’re holding. It’s based on what a tenant would pay for a year-long lease on a similar house.
If your property makes $12,000 a month but the comparable long-term rental down the street rents for $3,000, that’s what your downtime is worth. During peak season, that gap could get even bigger.
Then there’s the time limit. Loss of rents is typically capped at 12 months. A total loss can take 18 to 24 months to rebuild. After month 12, you’re not only getting less money than you usually make; you’re then getting nothing at all.
Closing these gaps happens at two levels: the form the policy is written on and what that policy actually says.
First, at the form level, short-term rental protection needs to be built on a commercial foundation: commercial property coverage plus commercial general liability.
Second, at the coverage level, it comes down to what the policy actually says. Not the brief outline on the first page, but the terms underneath it—what’s covered, what’s left out, and
what’s limited.
Here’s what you are looking for:
That’s the blueprint for true short-term rental insurance: a policy that matches the risk of short-term renting. If a policy does not cover those things, it is not short-term rental insurance, no matter how it is labeled or described.
If nobody asked you about it and you didn’t know to mention it either, it probably isn’t covered. Not the hot tub liability, the contents inside your Airbnb property, or what the property actually earns during peak season.
Here are three warning signs your policy isn’t short-term rental insurance:
If no one reviewed your listing, asked about safety features, or inspected the property, they didn’t plan to cover much.
The good news is you don’t have to wait for your policy renewal to start asking questions or switch coverage to a policy designed to handle the risks of short-term renting. If any of that sounds familiar, pull out the policy that currently protects your short-term rental and check for the following:
Next, send your agent the actual link to your Airbnb or direct booking site. They cannot build a policy around a business they’ve never seen. If you own more than one property, do this for each one. Policies bought at different times through different agents rarely match, so check each policy.
Better yet, you don’t have to sort through all of this on your own. Have a short-term rental insurance specialist read through it with you during a free coverage comparison from Proper Insurance.
The Proper Policy is a unique commercial homeowners policy built for short-term renting:
The Proper Policy isn’t an add-on to your homeowners or landlord policy—it replaces it entirely. And with it, you gain a dedicated risk manager who will review your current policy against your actual business, virtually walk your property and your listing with you, and show you exactly where your biggest gaps are.
Don’t wait to discover your policy won’t cover a claim the way you thought it would. Start a quote today with Proper Insurance.
Non-affiliate disclosure: all information about this card has been collected independently by US Credit Card Guide and has not been reviewed by the issuer.
[2026.10 Update] The new offer is AS HIGH AS $500.
[2023.10 Update] The offer is now $250 ($3,000 spending in 3 months).
[2023.6 Update] The $250 offer (with $3k spending requirement) is expired. The current offer is $500 (with $15k spending requirement).
This card has similar structure to AmEx Blue Business Plus, but with Plus you earn 2x MR while with this card you earn 2% cashback. Cashback is not as rewarding as MR points. You can also earn 2% cashback with personal credit cards, such as Citi Double Cash or PayPal Cashback Mastercard, with no cap. Therefore personally I do not recommend this card.
BofA cuts Werner Enterprises stock price target on cost pressures
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Agency securitization issuances are predicted to decline by 16% in 2027 on weaker home sales and more all-cash transactions due to persistently high mortgage rates, the latest Bank of America Securities weekly report said.
Gross MBS volume for next year of $1.12 trillion compares with B of A’s latest forecast of $1.33 trillion during 2026, a slight upward revision from the previous prediction of $1.32 trillion for this year.
Its forecast is based on expectations that the 10-year Treasury yield will average 5.25%. Between Sept. 25 and Oct. 14, this had been close to or above this mark. But thanks to a rally at the end of the week, on Monday morning it opened at 5.09%.
Other inputs into the 2027 forecast included a 2.5% drop in existing home sales, a 0.5% gain in new home sales and 1% annual home price appreciation.
Fannie Mae just reduced its
But the B of A analysts are more bearish for next year, and are now predicting $1.72 trillion of 2027 volume.
“We believe our numbers reflect our slightly more conservative view on housing and home sales and a marginally higher projected year-end rate level,” the report said.
B of A prediction for total originations in 2026 is also slightly under both MBA and Fannie Mae’s predictions, at $2.03 trillion.
“Light expected issuance was a theme at the MBA annual conference, where the tone from lenders was grim, but the light supply should be a positive technical for investors,” said the report, which lists Jeana Curro as the lead analyst.
As for the 10-year, the analysts remain “secular bears,” but the rally could bring yields to levels between 4.92% and 5.02%, “or potentially deeper but not to fall below 4.74%.”
The conforming 30-year fixed rate mortgage averaged 7.458% at its most recent high point, on Oct. 4, according to data from Optimal Blue. Since then, the rate — except for Oct. 14, the day
B of A also predicted a 23% drop off in net issuance (takes into account mortgage pay downs, prepayments and pay-offs) in 2027. This is “driven primarily by
“These headwinds are expected to be partially offset by a modest increase in cash-out refinance activity and
The amount of agency-eligible investor loans going into non-agency issuances has grown since 2023, from $1.5 trillion to $10.1 trillion for last year and $12.4 trillion so far in 2026.
The 2026 total does not include $5.3 trillion of agency conforming loans which went into private-label securities, up from $2.7 trillion in 2025.
“We expect this strength to continue in to 2027, and estimate the corresponding reduction in Agency MBS net issuance at $25 billion,” the report said.
The B of A economists are also maintaining their prediction that the Federal Open Market Committee will raise short-term rates in October, but added it is “a close call,” as the markets gave it a 25% probability when the report was written on Oct. 16.
On Monday morning, probabilities as measured by CME FedWatch were nearly 83% for no action and just 17.2% for a 25 basis point increase in the target.
This being said, the likelihood of a December hike was over 90%, CME FedWatch said.
A federal judge on Monday ordered a former OpenAI engineer accused of bugging an executive conference room to stay in jail, after questioning whether a $1 million bond the Saudi government offered to guarantee would bring him back if he fled.
Abdulrahman Alfozan, the 35-year-old former OpenAI engineer, appeared in court today wearing an orange jumpsuit and white face mask while escorted by two U.S. marshals. He will remain in federal custody until his next court date, a preliminary hearing on Nov. 6. He has been in jail since the FBI arrested him on Oct. 9, alleging he planted the device in a conference room where executives, and sometimes government officials, discussed sensitive information, on Sept. 28.
Magistrate Judge Alex G. Tse said a $1 million bond had to be weighed against the possibility that Alfozan “potentially has access to much greater wealth.”
“Once he leaves, there’s no getting him back, and that’s why this is a bigger case,” Tse said in the courtroom Monday morning.
OpenAI terminated Alfozan’s employment on Oct. 9, although Alfozan’s lawyer said Monday in court the company never formally told him that. However, per his defense motion, he was told before his arrest that he had been placed on administrative leave. Tse noted that OpenAI would not have fired him if it had no concern about what it found.
Fortune was in the San Francisco courtroom for the hearing, as were about 60 others, including a group of high school students who had come to witness a case involving one of the most prominent companies in the world.
Ahead of the court hearing Monday, both prosecutors for the federal government and the defense, Alfozan’s attorney William Pernik, filed court documents revealing new details about the case. Alfozan sought release from federal custody, with supervision, such as an ankle monitor, while the U.S. argued there was reason to believe he would leave the country and that he posed a danger to the community and to U.S. national security.
Alfozan faces one count of using or attempting to use a device to intercept oral communications, which carries a maximum of five years in prison. He was charged by criminal complaint and has not been indicted or entered a plea. The complaint does not charge him with espionage, theft of trade secrets, or acting as an agent of a foreign government, a point his defense stressed in its motion. OpenAI has said it has “no indications” that he inappropriately accessed or took model weights, source code, or customer data.
The filings reveal far more than has been known to date about Alfozan and some of the most controversial details of the case, including why Alfozan had a one-way flight booked to Saudi Arabia three days after his arrest. Alfozan’s lawyer said he is a citizen of Saudi Arabia, although he has been in the U.S. for 15 years; got his green card in 2020; and joined OpenAI in 2025.
Alfozan booked the flight to Saudi Arabia on Sept. 13, according to the defense motion, along with his wife, also a Saudi national, and 3-month-old baby. The economy fare for all three cost $1,897.59 and could be changed for a $180 fee, the defense said, adding this wasn’t unusual for its client: Alfozan often books one-way tickets to allow for scheduling flexibility around his work schedule, the defense motion says. In fact, 70% (96 of 138) of the airline bookings “in his email since January 2021 were one-way tickets.” His naturalization application lists 25 trips abroad between 2020 and 2025, 20 of which included Saudi Arabia, and he returned from every one, according to the defense.
As for the date of Oct. 12, Alfozan booked it for then because that’s the day his wife’s 60-day grace period ended after her work permit in the U.S. expired on Aug. 13. Since giving birth, she has “struggled with postpartum depression and anxiety,” the defense motion says. Alfozan filed for paternity leave from OpenAI, set for Oct. 19 to Dec. 20, after which he planned to return to the Bay Area and his role at OpenAI.
After Alfozan’s arrest, his wife allegedly told authorities that she and their baby intended to permanently move to Saudi Arabia, according to the court filing. She told them her husband intended to move there at some point to be with them, but for now, was spending two months of his paternity leave in the country before returning to the U.S. In court Monday, however, the defense said she now plans to return to the U.S. on a temporary, short-term B-1 visa. The defense also said she left the U.S. rather than overstay her visa.
That is consistent with a letter one of Alfozan’s friends submitted for the defense motion, in which the friend says he spoke to Alfozan about his plan to continue working in the U.S. and supporting his wife and baby when they returned to Saudi Arabia.
As further evidence of Alfozan’s intent to return to the U.S., his lawyer notes that on Sept. 26, two days before he allegedly planted the device, Alfozan registered to attend the Consumer Electronics Show (CES), a convention in Las Vegas scheduled for early January 2027.
In court, Pernik argued that Alfozan stayed in the country for about eight to 10 days after OpenAI confronted him. “If he really were an agent of a foreign government … why wouldn’t he just leave right away?” Pernik said in court.
The U.S. filing also reveals the results of a federal search of Alfozan’s home and cell phone. They found “several electronic components similar” to the recording device Alfozan allegedly installed behind a TV in the conference room, and a second one OpenAI security staff found in his bag.
On Alfozan’s iPhone were several photographs, dated from Sept. 22 to Sept. 28, 2026, of another recording device. Other photos showed what appeared to be the input and output panels on televisions and other devices in “various locations in OpenAI buildings” including another conference room where “sensitive meetings” frequently occurred, according to the filing. This suggested Alfozan “had done reconnaissance at OpenAI to determine where he might install additional devices,” the U.S. filing says.
Also on Alfozan’s iPhone was a note he had deleted from September 2026, which had links to different recording devices, including ones made by Seeed Studio, the type of device Alfozan allegedly put in the conference room and which had been found at his residence.
Two other notes stood out. One titled “Riyadh tasks,” last modified Sept. 13—the day he booked the flight—listed finding an apartment and a job for his wife and getting a Saudi passport for his son. Another, titled “OpenAI leave” and last modified Oct. 7, suggested he planned an “early … pick up” of the devices and extending his leave “to full,” according to the U.S. filing. His wife also told FBI agents she had seen her ChatGPT account open on her husband’s laptop, the filing says.
In court, Pernik disputed the government’s account of the room. “This was an open room where anyone could walk in,” he said, adding that Alfozan held meetings and led teams there. The complaint, however, says Alfozan had no authority to enter the room or take part in meetings there.
“OpenAI encouraged Mr. Alfozan to be involved with Saudi Arabia,” Pernik said.
Prosecutors said in court they don’t know what information Alfozan may have tried to take out of OpenAI and the U.S. “That is the concern, that something is going to leave OpenAI and the U.S., and quite frankly we don’t even know what that is,” Assistant U.S. Attorney Nick Parker said.
The court filings also reveal Alfozan’s browser history, which allegedly shows he accessed a folder called “Saudi Gov Docs” on Oct. 4, 2026. Between July 6 and Sept. 21, 2026, he queried an internal OpenAI productivity tool about which OpenAI staff could be suitable to attend a high-level informal meeting with ministers in Saudi Arabia, and about planned OpenAI visits to Saudi Arabia. He also asked the tool on Sept. 7 who at OpenAI might be likely to attend a meeting with the Saudi state–backed AI company Humain and the Ministry of Communications and Information Technology (MCIT) of Saudi Arabia.
He asked the tool about matters related to MCIT again on Sept. 8, such as an upcoming Saudi MCIT visit on Sept. 9, as well as on Sept. 21. Alfozan’s base salary at OpenAI was $385,000, (up from $325,000 when he was hired) plus a $2.2 million new-hire equity grant.
“OpenAI encouraged Mr. Alfozan to be involved with Saudi Arabia,” Pernik said in court.
Alfozan’s wife and child left the U.S. within 36 hours of his arrest. They did not take the originally planned Oct. 12 flight. Instead, the Saudi government first booked and paid for another one-way ticket for her and their son to Jeddah, Saudi Arabia, on Oct. 11. However, they also did not take that flight, but rather left a day earlier on Oct. 10 on another business class flight to Qatar booked and paid for by a member of the Saudi military, court documents say.
In court Monday, the defense specified that Alfozan’s brother-in-law (his wife’s sister’s husband) booked the flight. He works in the Saudi government, and paid for the flight with his own money.
The Saudi Consulate General in Los Angeles said in an Oct. 14 letter, filed with the defense motion, that it stands ready to cover the full amount of any bail bond the court requires. It also told Pretrial Services in writing that it “will not issue any travel documents” to Alfozan while he is on release. In court, Pernik said the Saudi government was willing to guarantee $1 million, “giving their full faith and credit,” and would notify the State Department. Tse asked whether the offer amounted to Saudi Arabia keeping him in the U.S. so it wouldn’t lose its money. Pernik said the relationship mattered more than the $1 million.
Alfozan was “in frequent communication via WhatsApp with a member of the Saudi Royal Family,” the U.S. alleges in its motion. The unnamed royal allegedly tried to recruit Alfozan for an AI initiative being launched in Saudi Arabia, and asked Alfozan when he would leave OpenAI. Alfozan allegedly said he wouldn’t leave until his stock vested, the government’s detention memo read.
Alfozan communicated with the unnamed royal as recently as Oct. 5, 2026, court documents say. In May 2026, the royal told Alfozan, “Saudi needs you more then [sic] the US!” Alfozan responded, “100,” indicating agreement.
Alfozan had applied in July to a program for young Saudi Arabian leaders, the Misk Foundation’s 2030 Leaders program, according to the U.S. filing. He had proceeded to the second stage of the process, and checked the status of his application, as recently as Sept. 4, filings say. The program would have required him to take part in person in Riyadh, the filing says.
At the same time, Alfozan was on the “verge” of getting U.S. citizenship, the defense motion says. A day after OpenAI found the device, on Oct. 1, 2026, the U.S. Citizenship and Immigration Services notified him that his citizenship interview was set for Nov. 6, 2026. This was “a long-held dream for the Alfozan family, as it is for so many immigrants,” reads the defense motion. That interview has since been postponed because of the case, and his next court date is set for Nov. 6, the date of the originally scheduled interview. The defense also told the court that Alfozan had worked and paid taxes in the U.S. for years, and had disclosed even traffic tickets on his citizenship application.
“His plan was always to return to the Bay Area, where his home, his career, and his community are,” the defense motion says. “The evidence shows that Mr. Alfozan planned to accompany his wife and son to Saudi Arabia for his paternity leave and then return.”
