OpenAI Cuts Funding Target to $20 Billion as AI Selloff Tests $1.25 Trillion Valuation

OpenAI is still raising money, just less of it. The ChatGPT maker is now seeking up to $20 billion in its latest funding round, down from an earlier target of about $30 billion, and it has trimmed the valuation it is asking investors to accept. The pullback, first reported by the Financial Times and confirmed by CNBC on Saturday, lands at the end of a week in which investors openly questioned whether the AI spending boom will pay off. For founders, CFOs and investors, it is the clearest sign yet that the price of AI capital is being renegotiated.

What Changed in the Round

According to the FT, OpenAI had pitched a $1.4 trillion valuation and met resistance from some investors. The company now seeks a post-money valuation of $1.25 trillion, and it set a Friday deadline for investors to commit. Some backers chose to reduce their allocations, and the round’s “first close” is expected to raise less than $20 billion, Reuters reported, citing the FT.

The round has not closed, and a person familiar with the deal told CNBC the figures could still change. OpenAI did not immediately respond to CNBC’s request for comment.

Who Is Writing the Checks

Investors from the United Arab Emirates are leading the round alongside Coatue, CNBC said. Per the FT report relayed by Reuters, a UAE consortium that includes state-backed technology fund MGX is expected to be the largest participant, and as part of the deal OpenAI would gain an option to lease newly built computing capacity in the region. Venture firms Founders Fund, Sequoia Capital and Andreessen Horowitz are also expected to take part.

One detail stands out for the broader market: wealthy individuals will have the option to invest in a later retail offering at the same $1.25 trillion valuation, according to the FT. Opening a private round to high-net-worth buyers widens OpenAI’s pool of capital at a moment when some institutional investors are pulling back.

A Bruising Week for AI Stocks

The timing is not a coincidence. The Nasdaq Composite fell 2.9% on Friday and closed 7.8% below its all-time high from Oct. 6, Reuters reported. The Nasdaq 100 dropped 3.5%, putting it on the edge of a correction, and the composite finished its worst month since March 2025, according to Reuters via Moneycontrol.

Chip stocks led the slide. CNBC reported that Intel fell 25% on lackluster revenue guidance, Micron dropped 5.5% and Nvidia lost 4%. The selling followed earnings from Microsoft, Alphabet and Amazon, all of which gave capital spending figures or forecasts below analyst estimates. Alphabet also posted its worst trading day ever on Thursday after search revenue missed expectations, CNBC noted.

Put together, those numbers explain why investors suddenly care about price. If the biggest cloud providers are spending less than expected, the demand forecasts behind trillion-dollar AI valuations get harder to defend.

The IPO Race Behind the Raise

OpenAI is working toward a stock market listing next year, and it has been keen to close this round before rival Anthropic goes public, Startup Researcher reported, noting that Reuters has said the two companies are pitching a similar investor base. Que.com looked at the risks in Anthropic’s listing in How the Anthropic IPO Exposes Hidden AI Investment Risks. With two AI labs competing for the same pool of late-stage money in a falling market, the one that closes first gets the better terms.

Why It Matters for Business

A $10 billion haircut on a $30 billion target is still an enormous raise, and $1.25 trillion is still a valuation few companies have ever reached. The story is not that OpenAI is in trouble. It is that the most sought-after private company in the world had to bend on price. That has three practical implications.

Capital is getting more selective. If OpenAI faces pushback, smaller AI startups raising in the coming months should expect tougher questions about revenue, margins and compute costs, and plan for flat or down rounds rather than automatic step-ups.

Sovereign money is becoming central. Gulf investors leading the round, with access to regional computing capacity attached, shows how AI financing is tied to energy and data center deals. Businesses that depend on AI vendors should watch where that infrastructure is being built, because it shapes pricing and availability.

Buyers gain leverage. When AI providers feel pressure to show returns, enterprise customers usually get better terms. Companies negotiating AI software or cloud contracts now may find vendors more flexible on price and more eager to prove measurable results.

What to Watch Next

The key numbers are the size of the first close and whether the $1.25 trillion valuation holds through the retail offering. Investors will also be watching Anthropic’s listing progress and whether chip stocks stabilize after October’s losses. If the market keeps sliding, today’s lower target may not be the last revision. If it recovers, OpenAI could find late investors willing to come back in at the price it originally wanted.

For now, the message to every business betting on AI is simple: the money is still there, but investors want proof that the spending turns into profit.

Edited by Coron @QUE.COM
Website: https://QUE.COM Intelligence
Sponsored by: https://MAJ.COM AI Autonomous