OpenAI has cut the target for its latest funding round by $10 billion, to about $20 billion, as a sell-off in technology stocks driven by worries about artificial intelligence spending has changed the mood around even the most closely watched private company in the sector. The Financial Times reported the lower target on Friday, citing people with knowledge of the matter, in a sign that investors are becoming more selective about the price they will pay for AI growth.
The ChatGPT maker had set Friday, October 30, as the deadline for investors to commit to the round. According to the report, the first close is expected to raise less than $20 billion after some investors reduced their allocations. That is a meaningful shift from where the round started, and it comes at a moment when public markets have been punishing technology shares for heavy AI infrastructure spending rather than rewarding them for it.
Key Takeaways
- OpenAI has cut its latest funding target by $10 billion, to about $20 billion, the Financial Times reported.
- The report puts the desired valuation at $1.25 trillion, and says the first close is expected to raise less than $20 billion.
- A consortium of United Arab Emirates investors, including the state-backed technology fund MGX, is expected to be the largest participant.
What the Report Says
The report’s central figures are straightforward. OpenAI is now seeking about $20 billion, down $10 billion from its earlier target, and the desired valuation is put at $1.25 trillion. The first close is expected to raise less than $20 billion after some investors reduced their allocations. Wealthy individuals will have the option to invest in a subsequent retail offering at the $1.25 trillion valuation, according to the report.
Those details matter because they describe a negotiation, not a collapse. A first close below the headline target does not mean the round has failed; it means the first group of investors committed less than the company had hoped for at the outset. Later closes, and the planned retail offering, could still add to the total. What has changed is the pricing power: in a calmer market, OpenAI could set the terms; in this market, investors have been able to trim their commitments.
The first close is expected to raise less than $20 billion after some investors reduced their allocations.
Why the Timing Matters
The timing is inseparable from the wider technology sell-off. United States technology stocks have suffered a rout amid growing worries over massive spending on AI, and the tech-heavy Nasdaq index dropped 2.9 per cent on Friday, falling to about 7.8 per cent below its all-time closing high reached on October 6. That session was part of a broader slide that hit chipmakers and large technology companies alike, as investors questioned whether AI spending is generating returns quickly enough.
Readers following that market slide can read our earlier coverage of the Nasdaq’s worst day since June, led by Intel and Amazon. The OpenAI report fits the same pattern: strong AI demand is no longer enough on its own, and investors are now asking harder questions about business models, financing requirements and how quickly AI investment turns into profit. A private funding round is not priced by the stock market directly, but the same investors, and the same doubts, sit on both sides of that line.
Who Is Still In
Despite the lower target, the report describes a broad group of participants. A consortium of United Arab Emirates investors that includes the state-backed technology fund MGX is expected to be the largest participant in the round, and as part of the deal, OpenAI would gain the option to lease newly developed computing capacity in the region. That computing element is important: for an AI company, access to computing power is almost as valuable as cash, because training and running large models depends on it.
Venture capital firms including Founders Fund, Coatue, Sequoia Capital and Andreessen Horowitz are also expected to participate, according to the report. The report added that OpenAI, MGX, Coatue, Sequoia Capital and Andreessen Horowitz did not immediately respond to requests for comment, and that Founders Fund could not be reached. Those non-responses are normal for a private round still being finalised, and they mean the reported figures should be read as the Financial Times’ account from people with knowledge of the matter, rather than as a confirmed company announcement.
- Funding target cut by $10 billion, to about $20 billion, according to the Financial Times.
- Desired valuation put at $1.25 trillion, with a retail offering planned at that valuation.
- First close expected below $20 billion after some investors reduced allocations.
- UAE consortium including MGX expected to be the largest participant, with an option to lease new computing capacity.
- Founders Fund, Coatue, Sequoia Capital and Andreessen Horowitz also expected to take part.
- Nasdaq fell 2.9 per cent on Friday, about 7.8 per cent below its October 6 closing high.
The Race Against Anthropic
One reason OpenAI has been keen to close the round, according to Reuters reporting cited in the coverage, is the race with Anthropic. OpenAI is pursuing a listing in 2027, and it has wanted to get ahead of Anthropic’s imminent listing, because the two companies are tapping a similar investor base. A smaller first close does not change that logic, but it does show that the investor base is no longer willing to fund both companies at any price.
That context also connects to the round’s earlier stage. Our earlier report on OpenAI’s $30 billion funding round and its October 30 investor deadline described the scale of the ambition at the start of this process. The move from that starting point to a target of about $20 billion, with a first close expected below that figure, is the clearest measure yet of how much the market mood has shifted in a matter of weeks.
There is a wider lesson in that shift for the AI sector as a whole. For two years, the dominant question was whether companies could build fast enough. The question now, from investors, is whether they can earn fast enough — and whether the enormous spending on data centres, chips and energy will pay for itself on a timetable that justifies today’s valuations. OpenAI is not a public company, so it does not face a daily share price, but its private valuation is set by the same people who set public ones, and they are currently in a more cautious mood.
What to Watch Next
What to watch next is what the article has already set out: whether the first close lands below $20 billion as reported, how much the subsequent retail offering adds at the $1.25 trillion valuation, and whether the UAE consortium’s computing arrangement becomes a template for future AI funding deals. The other tests are whether technology stocks stabilise after Friday’s sell-off, whether OpenAI’s 2027 listing plans stay on track, and whether Anthropic’s listing changes the competition for the same investors. Until those answers arrive, the reported cut stands as a marker of the moment: even the company at the centre of the AI boom is now raising money in a market that wants a lower price.