OpenAI Scales Back Its Funding Round Target to $20 Billion Amid Tech Selloff

OpenAI is now aiming to raise up to $20 billion, a $10 billion cut from its earlier goal of about $30 billion. The round values the company at $1.25 trillion after the investment. A person familiar with the deal says it is still open, so the numbers could shift. Investors were reportedly given a Friday deadline to commit, and some chose to lower their allocations. Backers from the United Arab Emirates are leading the round together with Coatue.

Why Investors Are Cautious About AI Spending

The news lands after a week of doubts over whether the huge sums poured into data centers and GPUs will pay off. Microsoft, Google parent Alphabet and Amazon all reported capital spending figures or forecasts below analyst estimates. Alphabet had its worst trading day ever on Thursday after weaker search revenue, which executive Philipp Schindler partly blamed on lower monetization in its AI Mode.

AI Stocks Fall

On Friday, AI related shares dropped sharply. Intel lost 25% after disappointing revenue guidance, Micron slid 5.5% and Nvidia fell 4%.