OpenAI Cuts Funding Target, Eyes $1.25 Trillion Valuation

According to CNBC, OpenAI is seeking to raise up to $20 billion in its latest funding round, down from its earlier target of as much as $30 billion. A person familiar with the transaction told CNBC that the funding round remains ongoing and has not yet closed, meaning the final amount could still change. The individual requested anonymity because they were not authorized to discuss the details publicly. OpenAI did not immediately respond to a request for comment.

The Financial Times first reported that OpenAI had reduced its fundraising target by $10 billion and was seeking a post-money valuation of $1.25 trillion. According to the report, the ChatGPT developer set Friday as the deadline for investors to commit to the latest round, with some investors choosing to reduce their allocations. CNBC previously reported that investors from the United Arab Emirates and Coatue were jointly leading the funding round.

OpenAI's revised fundraising target comes amid growing scrutiny of major technology companies' artificial intelligence (AI) investments. Technology giants have committed substantial capital to building data centers and securing advanced graphics processing units (GPUs) to support the rapid expansion of AI infrastructure. However, investors are increasingly questioning whether these investments will generate sufficient financial returns.

AI-related stocks declined on Friday. Intel shares fell 25% following weaker-than-expected revenue guidance, while Micron dropped 5.5% and Nvidia declined 4%. Microsoft, Alphabet's Google, and Amazon have significantly increased spending in recent years to meet rising demand for AI computing infrastructure. However, their latest capital expenditure figures or forecasts released over the past week came in below analyst expectations.

Alphabet also recorded its worst trading day on record on Thursday after reporting search revenue below market expectations. The company's Chief Business Officer, Philipp Schindler, said the impact on search revenue was partly related to lower monetization within its AI Mode feature, highlighting the challenges technology companies face in generating revenue from AI-powered services.