OpenAI is seeking to raise up to $20 billion in a new funding round, down from an earlier target of up to $30 billion, CNBC reported on Saturday. The round remains in progress and has not closed, so the figures may change, a person directly familiar with the deal told the outlet.
The Financial Times reported that OpenAI reduced its target by $10 billion and would seek a post-money valuation of $1.25 trillion. The ChatGPT developer set a Friday deadline for investors to commit to the newest round, with some investors opting to reduce their allocations, according to the FT. Investors from the United Arab Emirates are leading the round alongside Coatue, CNBC previously reported.
The cut follows a week in which investors questioned whether big tech firms' spending on AI infrastructure, especially data centres and GPUs, will deliver adequate returns. AI-linked stocks fell on Friday, with chip maker Intel down 25 per cent on lacklustre revenue guidance, Micron down 5.5 per cent and Nvidia falling 4 per cent.
Microsoft, Alphabet's Google and Amazon have been on a spending blitz in recent years to meet the surge in demand for AI infrastructure, but all three issued capital expenditure figures or forecasts last week that came in below analysts' estimates. The companies have invested heavily in building out data centres and acquiring GPUs to support the growing computational needs of artificial intelligence systems.
Alphabet saw its worst trading day ever on Thursday after its search revenue fell short of expectations. Philipp Schindler, the company's chief business officer, said the impact on search was partly because of lower monetisation within the company's AI Mode. The disappointing results have raised broader questions about the timeline for AI investments to generate meaningful revenue growth across the technology sector.
The reduced fundraising target comes as OpenAI continues to develop its ChatGPT platform and other AI products, whilst navigating an increasingly cautious investment environment. The company has not immediately responded to requests for comment on the revised funding round.
Why it matters for wealth
The reduced target and investor pullback signal growing caution over AI valuations at a time when hyperscalers are spending billions without clear near-term returns. The shift could affect portfolio exposure to AI-linked equities and venture capital allocations in the sector.
Source: CNBC
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