OpenAI Trims Funding Target to $20bn as Tech Shares Come Under Pressure

OpenAI has lowered the target for its latest funding round to about $20bn, roughly $10bn below its earlier aim, according to reports carried by the Financial Times and relayed by An-Nahar. The development matters for the wider artificial intelligence sector because it concerns the financing of one of its most prominent model developers, at a moment when investors are described as wary of the scale and returns of AI infrastructure spending.

The mechanism, as reported, is a combination of reduced ambition and reduced participation. OpenAI had previously been reported to be raising $30bn, first at a $1.4 trillion valuation and then at $1.25 trillion, ahead of a planned initial public offering. It has since cut both the valuation expectation to $1.25 trillion and the funding target, and set a Friday deadline for investors to confirm commitments. The first close is expected to fall short of $20bn after some investors reduced the size of their intended contributions, with a subsequent offering to wealthy individuals potentially bringing the total to target.

The investor group is expected to be led by a coalition from the United Arab Emirates that includes MGX, the state-backed technology investment firm, and possible arrangements include giving OpenAI an option to rent new computing capacity being developed in the region. Founders Fund, Coatue, Sequoia Capital and Andreessen Horowitz are also expected to be on the list. The Wall Street Journal, in a follow-up cited by TechCrunch, said OpenAI had secured $11bn so far and that fundraising had met a "tepid" response from some large investors. An-Nahar reported that OpenAI, MGX and several of the investment firms did not respond to Reuters requests for comment, and that Founders Fund could not be reached.

The backdrop is a broad retreat from US technology stocks. An-Nahar reported that the Nasdaq fell 2.9 per cent on Friday, leaving it 7.8 per cent below its record closing high of 6 October, amid concerns about heavy AI investment and whether it can generate returns commensurate with the spending. Reuters reported on 19 October that OpenAI was seeking to accelerate fundraising ahead of a possible 2027 listing, a step also tied to competition with Anthropic, which is preparing its own initial public offering. TechCrunch reported that Anthropic's planned IPO could face challenges too. The next milestone to watch is the completion of the first close and confirmation of the final amount raised.