OpenAI lowers its funding goal to $20 billion from $30 billion, reports say

OpenAI, the San Francisco company behind ChatGPT, has cut the amount it hopes to raise in its latest round of investment to as much as $20 billion, down from about $30 billion, according to reports by the Financial Times, The Wall Street Journal and CNBC. OpenAI did not respond to CNBC's request for comment, and the round is still open.

Investors would buy shares at a price that values the company at $1.25 trillion, CNBC reported. A company's valuation is what investors agree it is worth when they buy in. A group from the United Arab Emirates, including the state-backed fund MGX, would lead, with Silicon Valley investors such as Coatue, Sequoia, Founders Fund and Andreessen Horowitz expected to take part, the FT reported. Wealthy individuals could join later.

The reports point to weaker investor appetite, not a smaller need for money. The Journal reported that OpenAI has lined up about $11 billion so far and that some major investors held back over worries about whether the AI industry's huge spending can last. Some investors cut the amounts they had planned to put in after OpenAI set a Friday deadline, the FT reported.

The timing was rough. Tech stocks sold off last week after weak results from Google, Amazon and Intel raised doubts about the payoff from AI data centers, the Journal reported. The Nasdaq, an index of mostly tech stocks, fell 2.9% on Friday and is down 7.8% from its Oct. 6 high, CNBC said.

Rival Anthropic is also drawing money away. Its revenue more than doubled to $11.6 billion in the second quarter and it turned a small profit, while OpenAI's revenue rose about 18% to $6.7 billion and its losses grew, the Journal reported. Anthropic has filed to sell shares to the public, and OpenAI plans its own stock listing in 2027.

For the AI industry, a smaller round suggests investors are no longer willing to fund every company at any price. AI companies spend billions on chips and data centers, so tighter money could slow that building or push them to show profits sooner.

Source: TechCrunch, Oct. 31, CNBC, Oct. 31, CNBC summarizing the Financial Times, Oct. 31 and Investing.com summarizing The Wall Street Journal.