OpenAI cuts funding round target by $10bn as AI selloff hits tech stocks

OpenAI has cut the target for its latest funding round by $10 billion, to about $20 billion, as a selloff in technology stocks over AI spending worries forces investors to trim their allocations. The ChatGPT developer's sought valuation has also fallen, to $1.25 trillion, according to Token Times, which cited people with knowledge of the matter.

The company had set a Friday deadline for investors to commit, but the first close is now expected to raise less than $20 billion after some backers reduced their commitments, Token Times reported. A consortium of UAE investors including the state-backed technology fund MGX is expected to be the largest participant, and under the deal OpenAI would gain an option to lease newly developed computing capacity in the region.

Venture capital firms including Founders Fund, Coatue, Sequoia Capital and Andreessen Horowitz are also expected to take part, and wealthy individuals will have the option to invest in a later retail offering at the $1.25 trillion valuation, according to the report. OpenAI, MGX, Coatue, Sequoia Capital and Andreessen Horowitz did not immediately respond to requests for comment outside regular business hours, and Founders Fund could not be reached.

The retreat comes as US technology stocks absorb a broad selloff over the scale of AI spending. The Nasdaq fell 2.9% on Friday and sits 7.8% below its all-time closing high reached on 6 October. OpenAI, which is pursuing a listing in 2027, has been keen to close the round partly to get ahead of an imminent listing by rival Anthropic, as the two draw on a similar investor base, Token Times reported.