Is the "burning money narrative" of AI cooling down? OpenAI cuts its fundraising target by 10 billion

Author: Lin Chunmu, Gelonghui

The financing myth of the AI sector, which once attracted widespread attention, is now facing a test.

According to multiple media reports, OpenAI has lowered its new financing target to $20 billion.

This is a reduction of a full $10 billion from the previous target of $30 billion.

The valuation has also been adjusted down from $1.4 trillion to $1.25 trillion, a decrease of $150 billion.

What is even more concerning is that, as of the commitment deadline on Friday, OpenAI has reportedly secured only about $11 billion in investment commitments, less than half of the initial target of $30 billion.

Even when measured against the revised target of $20 billion, the market still predicts that the first round of funding will be difficult to complete in full.

From $30 Billion to $20 Billion

The reduction in this round of financing did not happen overnight.

In mid-October, OpenAI was still pushing for a financing plan of about $30 billion, with a valuation exceeding $1.4 trillion.

By around October 22, the valuation demand was first lowered to $1.25 trillion; then this week, the fundraising target itself was cut to $20 billion.

The urgency of the timeline is due to the impending IPO of competitor Anthropic.

Anthropic publicly released its listing documents this week, targeting a valuation of at least $1.5 trillion, potentially becoming one of the largest IPOs in history.

OpenAI originally wanted to secure investor commitments before Anthropic went public to avoid being passive in a competition for the same pool of institutional funds.

However, based on the actual subscription situation, this "head start" strategy has had limited effectiveness.

The timing of OpenAI's financing cooling coincides with a concentrated liquidation of AI spending in the public market.

This week, AI transactions experienced severe repricing, with U.S. AI-related stocks suffering significant declines.

The Philadelphia Semiconductor Index fell more than 8% this week; Intel plummeted 25% in a single day due to revenue guidance far below expectations, Micron fell 5.5%, and Nvidia dropped 4%; Alphabet had its worst trading day ever on Thursday.

The core question of market skepticism is simple: Where is the return on the hundreds of billions of dollars that large tech companies spend each year on building data centers and competing for GPUs?

The capital expenditure data or forecasts released by Microsoft, Alphabet, and Amazon have all fallen short of analyst expectations.

When the giants that vote with real money begin to shrink their spending expectations, the caution of the private equity market towards OpenAI is almost a natural consequence.

Additionally, deeper pressure comes from OpenAI's own spending commitments.

According to internal investor documents, OpenAI expects a cumulative free cash flow gap of about $278 billion from 2026 to 2030.

The nominal total of computing power and data center agreements signed in the past 15 months exceeds $1.4 trillion, about 35 times its current annual revenue.

Where Will the Money Come From?

It is reported that the leading party in this round of financing is a consortium from the United Arab Emirates.

Funds such as MGX and other UAE state-owned technology funds are the core contributors, along with well-known venture capital firms like Founders Fund, Andreessen Horowitz, SoftBank, and high-net-worth individual investors.

As part of the deal, OpenAI plans to lease newly added computing resources in the UAE to support model training and business operations.

To fill the gap, OpenAI is also looking towards more diversified sources of funding.

Insiders revealed that the company plans to expand its fundraising scope in the coming weeks to include family offices and high-net-worth individual investors.

The success or failure of this round of financing will directly impact the IPO timeline.

However, OpenAI's financing contraction does not mean that the long-term logic of AI has completely collapsed.

What has changed is the market pricing metric: in the past, funds were willing to pay for long-term stories, but now they are starting to demand visible paths to profitability.

In the past two years, valuations in the AI sector have soared, with funds pouring into computing power and large model sectors.

Now the market has entered a verification period, and the margin for error in high valuations is narrowing.

The final outcome of OpenAI's current round of financing will serve as a barometer for observing the AI capital cycle.

If fundraising continues to fall short of expectations, the pace of computing power procurement and expansion throughout the entire AI industry chain may slow down.

For the entire industry, the period of frenzy has passed.

Moving forward, profitability and cash flow will be the most valued metrics by capital.