OpenAI reduces fundraising target, aiming for up to $20 billion in current round.

OpenAI reduces fundraising target, aiming for up to $20 billion in current round.
Summary
OpenAI is raising up to $20 billion, reducing its original target of $30 billion.
The funding round seeks a post-money valuation of $1.25 trillion for OpenAI.
Major tech firms are questioning the returns on AI infrastructure spending amid stock declines.

Share

Bookmark

Newsletter

OpenAI is currently in the process of securing up to $20 billion in a new funding round, according to a report from CNBC on Saturday. This marks a significant decrease from their initial goal of raising as much as $30 billion.

The funding effort is still underway, and details may change as the round has not yet closed, according to a source familiar with the situation who wished to remain anonymous due to the sensitivity of the information.

The company has not responded yet to requests for comment regarding this development.

The Financial Times initially broke the news of OpenAI's lowered funding target, reporting a decrease of $10 billion and indicating that the company is aiming for a post-money valuation of approximately $1.25 trillion. The FT highlighted that OpenAI set a deadline for investor commitments by Friday, with some investors choosing to scale back their initial allocations.

Leading this latest funding round are investors from the United Arab Emirates, alongside Coatue Management, as previously mentioned by CNBC.

The decision to scale back its funding aspirations comes during a challenging week for tech investors, who have been questioning whether the significant investments made by major tech companies in AI—particularly for data center expansions and GPU procurements—will yield satisfactory returns.

On Friday, shares in AI-related sectors took a hit, with Intel's stock plunging by 25% amid disappointing revenue projections, while Micron experienced a 5.5% decline and Nvidia saw a 4% drop.

In recent years, Microsoft, Google’s parent company Alphabet, and Amazon have ramped up their expenditures to meet the growing demand for AI-related infrastructure. However, all three companies reported capital expenditures that fell short of analysts’ expectations last week.

Alphabet, in particular, had its worst trading day on Thursday, as its search revenue did not meet market predictions. Philipp Schindler, the chief business officer, attributed some of the challenges to reduced monetization within the company’s AI Mode.

Loading comments...