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OpenAI has reportedly reduced its latest fundraising target by USD 10 billion as investors become more cautious about the rising cost of artificial intelligence development. The ChatGPT maker is now seeking USD 20 billion at a valuation of USD 1.25 trillion, down from its earlier target of USD 30 billion at a USD 1.4 trillion valuation.
According to reports cited by the Financial Times, the company has secured commitments worth approximately USD 11 billion so far. The revised target comes amid growing pressure on technology companies to demonstrate returns from their massive investments in AI infrastructure.
This change is linked to worries about how much capital is required by the AI sector for its continued development. This is because many firms are investing a lot in data centers, computational facilities, and sophisticated AI systems, while at the same time investors are beginning to question their profitability.
Several technology firms have sought financial markets for raising money for their expansion projects. For example, Meta raised USD 37.5 billion via share offerings, and Microsoft raised USD 25 billion via bond issuances. Google has raised about USD 62 billion via its share offerings, while Amazon has raised close to USD 130 billion via debt.
OpenAI is also facing competition for investor attention from rival AI developer Anthropic. The company is reportedly preparing for a November initial public offering (IPO), with a potential valuation between USD 1.5 trillion and USD 2 trillion.
Anthropic's planned listing could attract significant investor interest, with reports suggesting it may seek to raise as much as USD 100 billion. This creates another major investment opportunity at a time when technology stocks are facing market volatility.
Also Read: OpenAI vs Anthropic vs Google: How AI Companies Are Competing for Enterprise Adoption
The growing cost of AI development is putting pressure on companies that depend heavily on external financing. OpenAI, Anthropic and AI infrastructure providers are among those facing questions about spending and future profitability.
Changes in the investment environment indicate that availability of funds alone might not be sufficient anymore. Investors have started expecting proof that the heavy investment in AI products and infrastructure is capable of bringing in income.