OpenAI cuts fundraising target to $20 billion

OpenAI is seeking to raise up to $20 billion in a new funding round, a reduction from its previous target of up to $30 billion. The company aims for a post-money valuation of $1.25 trillion. A person directly familiar with the deal confirmed the figures to CNBC on Saturday, noting that the round has not yet closed and amounts remain subject to change.

The Financial Times first reported the reduction, stating that OpenAI set a Friday deadline for investors to commit to the round. Some investors opted to reduce their allocations during this period. United Arab Emirates-based investors are leading the round alongside the firm Coatue.

The move follows a week of market scrutiny regarding artificial intelligence spending. Investors questioned whether major technology companies' expenditures on data centers and graphics processing units would yield sufficient returns. On Friday, AI-linked stocks declined. Chip maker Intel dropped 25% after issuing weak revenue guidance. Micron shares fell 5.5%, and Nvidia shares lost 4%.

Major tech firms have increased spending to meet rising demand for AI infrastructure. However, Microsoft, Alphabet, and Amazon recently issued capital expenditure figures or forecasts that fell below analyst estimates. Alphabet experienced its worst trading day on Thursday after search revenue missed expectations.

Philipp Schindler, the chief business officer at Alphabet, said the impact on search was partly due to lower monetization within the company's AI Mode. OpenAI did not immediately respond to a request for comment regarding the adjusted fundraising goal.