OpenAI cuts its new funding round target by $10 billion to $20 billion as AI spending fears grow
OpenAI is now seeking to raise up to $20 billion in its latest funding round, down from an earlier target of up to $30 billion, CNBC confirmed after the Financial Times first reported the cut. The round has not closed and the figures may still change. The move follows a week in which investors questioned whether the huge spending on artificial intelligence will pay off.
According to the Financial Times, the ChatGPT developer is seeking a post-money valuation of $1.25 trillion and set a Friday deadline for investors to commit, with some choosing to reduce their allocations. Investors from the United Arab Emirates are leading the round alongside Coatue, CNBC reported. OpenAI did not immediately respond to requests for comment.
The cut comes after a bruising week for AI-linked stocks. On Friday, Intel fell 25% on weak revenue guidance, Micron lost 5.5% and Nvidia 4%. Alphabet had its worst trading day ever on Thursday after search revenue missed expectations, which the company partly blamed on lower monetisation of its AI Mode. Microsoft, Google and Amazon have been spending heavily on data centres and chips, but all three gave capital spending figures or forecasts last week that came in below analysts' estimates.
OpenAI's rival Anthropic is also under scrutiny as it prepares a stock market listing: CNBC reported this week that its path to the Nasdaq had become "a lot bumpier" amid worries about AI spending.