OpenAI cuts funding round to $20bn at $1.25tn valuation as AI stocks slide

OpenAI is seeking up to $20bn in its latest funding round, down from an earlier target of up to $30bn, CNBC confirmed, with the Financial Times reporting that the ChatGPT developer is raising the money at a $1.25tn post-money valuation. The reduction lands squarely in the debate over whether the sums being committed to AI models, data centres and chips will produce commensurate returns — a question that has moved from the seminar room to the trading floor in the past week.

The round remains open and has not closed, so the figures are subject to change, according to a person directly familiar with the deal who spoke to CNBC on condition of anonymity. The Financial Times first reported the $10bn cut, saying OpenAI had originally planned to raise $30bn at a $1.4tn valuation and had set a Friday deadline for investors to commit, with some opting to reduce their allocations. AI Times, citing the Wall Street Journal, reported that about $11bn in commitments had been secured so far and that the first close could fall short of $20bn. Investors from the United Arab Emirates are leading the round alongside Coatue, CNBC reported; AI Times named the state technology fund MGX as a key participant and said Founders Fund, Sequoia Capital, Andreessen Horowitz and SoftBank were also expected to take part.

On Wall Street the backdrop is a reversal in sentiment. AI-linked stocks sank on Friday — Intel fell 25 per cent on lacklustre revenue guidance, Micron 5.5 per cent and Nvidia 4 per cent — in a week when Microsoft, Alphabet's Google and Amazon all issued capital expenditure figures or forecasts that came in below analysts' estimates. Alphabet suffered its worst trading day ever on Thursday after search revenue fell short of expectations; Philipp Schindler, its chief business officer, said the impact on search was partly due to lower monetisation within the company's AI Mode. AI Times reported that the Nasdaq 100 fell 3.5 per cent and the Nasdaq Composite 2.9 per cent.

Competitive timing adds pressure. Handelsblatt reported that OpenAI had wanted to close the round before the expected mid-November initial public offering of rival Anthropic. AI Times, citing company figures, said Anthropic's revenue more than doubled between the first and second quarters to $11.6bn, while OpenAI's rose about 18 per cent to $6.7bn; Anthropic posted a small operating profit, whereas OpenAI's operating loss widened, according to that report.

OpenAI did not immediately respond to a request for comment. According to AI Times, the company intends to approach family offices and wealthy individuals over the coming weeks and to run a separate retail offering at the $1.25tn valuation, while negotiating access to computing capacity in the UAE. The immediate test is whether the round closes, and at what size.