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Is the AI boom cooling? OpenAI's latest funding target reportedly shrinks by $10 billion, a 33% drop
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- DeepHorus
According to a Financial Times report on October 31, ChatGPT developer OpenAI has lowered the target for its latest funding round. The company originally planned to raise $30 billion at a $1.4 trillion valuation; it has now lowered the target by about $10 billion, a reduction of about 33%, and will instead seek about $20 billion at a valuation of about $1.25 trillion. This funding round had been positioned as investors' "last chance" to buy in before next year's IPO.
This adjustment comes amid a sharp pullback in tech stocks and growing market concerns over massive AI capital expenditures. The tech-heavy Nasdaq 100 index fell 3.5% this Friday. Investors have begun to reassess the payback period and sustainability of AI infrastructure investment.
People familiar with the matter said OpenAI set a deadline for investors to make funding commitments by Friday. Because some investors lowered their subscription amounts, the amount in the first closing may be less than $20 billion. The company's funding pace has therefore attracted market attention.
In this funding round, an investment consortium led by MGX, the UAE state-backed technology fund, is expected to become the largest contributor. As part of the deal, OpenAI may also have the option to lease newly built computing capacity in the UAE. Institutions including Sequoia Capital, Founders Fund, Coatue, Andreessen Horowitz, and SoftBank also plan to participate.
The moves of competitor Anthropic are also affecting the pace of OpenAI's fundraising. The latter is expected to go public next month at a valuation that could reach $1.5 trillion or higher, and is attracting large amounts of investor capital and market attention. This puts OpenAI under fiercer competition in its fundraising window.
Despite the reduced fundraising target, OpenAI's capital needs remain enormous. The company had already raised $122 billion in March this year, but plans to invest several times that amount in the computing power needed for model training and operation. The reduction in fundraising scale has not changed its long-term direction of investment in computing power.
With the tech stock pullback and concerns over AI capital expenditures intertwined, OpenAI's fundraising target for this round has contracted, but its need for computing power investment remains huge. Whether the first closing amount can reach $20 billion, and the capital diversion effect brought by Anthropic's listing, will become the focus of market attention.
