OpenAI Lowers Funding Target to $20 Billion as Investor Appetite Cools
OpenAI has scaled back its fundraising ambitions, cutting the target for its latest investment round by $10 billion to around $20 billion, while also reducing its targeted valuation from $1.4 trillion to $1.25 trillion, according to the Financial Times.
The adjustment comes as investors become more cautious about the economics of artificial intelligence, particularly the massive costs required to develop advanced models and build the computing infrastructure needed to operate them at scale.
Investors May Commit Less Than $20 Billion
Sources cited by the Financial Times said some investors have reduced the amounts they initially planned to commit to the round.
As a result, the initial closing of the financing could fall below the revised $20 billion target, despite OpenAI setting a deadline last Friday for investors to submit their commitments.
The move highlights the growing scrutiny facing AI companies as investors assess whether rapidly increasing spending on computing capacity, data centers and advanced chips can generate sustainable financial returns.
UAE Investment Groups Expected to Lead Round
A consortium of UAE-based investment groups is expected to account for a significant portion of the financing, with state-backed MGX among the investors reportedly positioned to play a leading role.
The deal could also give OpenAI an option to lease additional computing capacity being developed in the region.
Other major investment and venture capital firms expected to participate include Founders Fund, Coatue, Sequoia Capital and Andreessen Horowitz, alongside SoftBank.
Potential Follow-Up Investment for Wealthy Investors
OpenAI is also considering a subsequent investment offering that could allow wealthy individuals to acquire stakes in the company at the targeted $1.25 trillion valuation.
Such a transaction could provide another route for OpenAI to complete its broader fundraising objective of approximately $20 billion.
Technology Stocks Face Renewed Pressure
The reduction in OpenAI’s fundraising target comes as U.S. technology stocks face a broader sell-off, reflecting growing investor concerns about the economic returns of enormous AI investments.
Investors are increasingly questioning whether spending on data centers, semiconductors and computing infrastructure can ultimately translate into sustainable revenue and profitability.
The Nasdaq fell around 2.9% during Friday’s trading session, according to data cited by Reuters, as pressure continued on technology companies closely linked to the AI boom.
Anthropic Adds to the Competition for Capital
OpenAI is also competing with Anthropic, the developer of the Claude AI model, for investor attention and capital.
Anthropic is preparing for a potential initial public offering, with reports indicating that it could seek a valuation above $1.5 trillion. The prospect of another major AI company entering the public markets could intensify competition for available investment capital.
OpenAI raised $122 billion in March, but its expansion plans require substantial ongoing spending on computing capacity and the development and operation of advanced AI models.
With investors becoming more selective, the scale and financial sustainability of such spending are now facing closer scrutiny.