Funding

OpenAI Cuts Funding Round to $20 Billion as A.I. Sector Wobbles

co-produced by AI31. October 2026, 06:41

OpenAI CEO Sam Altman speaking on stage at DevDay — OpenAI CEO Sam Altman at DevDay. © OpenAI

First no I.P.O., now less money from private investors. OpenAI has lowered the target of its current funding round by $10 billion to $20 billion (about €18 billion), according to The Financial Times. The valuation is coming down, too: Instead of $1.4 trillion, the ChatGPT maker is now aiming for $1.25 trillion (about €1.12 trillion), a discount of $150 billion.

Investors Pull Back

The reason for the retreat: Some investors have reduced the amounts they had planned to contribute, according to people familiar with the matter. The deadline for binding commitments passed on Friday, and the first close could even come in below the new $20 billion target, The FT reported. One of the backers told the newspaper that the process had started amid the enthusiasm for A.I. stocks and was then caught out by the sharp reversal in the market.

The largest backer is expected to be a consortium from the United Arab Emirates that includes the state-backed tech fund MGX. In return, OpenAI gets the option to lease newly built computing capacity in the region. The venture capital firms Founders Fund, Coatue, Sequoia Capital and Andreessen Horowitz, as well as Masayoshi Son’s SoftBank, also plan to take part. After that, wealthy individuals are set to get an offer to invest at the same valuation, which could still bring the round to about $20 billion, according to one person familiar with the matter. OpenAI, Sequoia, Founders Fund and SoftBank declined to comment to The FT, while MGX, Coatue and Andreessen Horowitz did not immediately respond to requests.

For comparison: Only in March, OpenAI raised $122 billion (about €110 billion) at a valuation of $852 billion, from investors including Amazon, SoftBank and Nvidia. The company, however, plans to spend many times that amount on the computing power needed to train and run its models.

The new round is meant as a bridge, because OpenAI has shelved its I.P.O. for now. The company confidentially filed for a listing in June, but in September its chief executive, Sam Altman, ruled out going public this year. “Given everything happening with safety, right now would be an ill-advised moment to go public,” Mr. Altman said, according to TechCrunch. The chief financial officer, Sarah Friar, had already told employees in August that OpenAI would be a publicly traded company in 2027.

Why Investors Are Getting Nervous

The scaled-back round comes at a time when investors are increasingly questioning the billions being poured into A.I. Just on Friday, the tech-heavy Nasdaq slid after Alphabet, Amazon and Intel disappointed with their results. According to The FT, the Nasdaq Composite fell 2.9 percent on Friday, leaving it 7.8 percent below its record high from early October.

At OpenAI itself, the numbers are raising questions. Its annualized revenue run rate was about $50 billion (about €45 billion) at the end of September, according to The FT and Reuters. Investors had previously been told about $68 billion to $70 billion; the difference stems mainly from revenue through cloud partners that OpenAI does not fully book. At the same time, the company expects to burn a total of $278 billion (about €250 billion) in cash through 2030, according to The FT.

A Problem for the Entire Industry

OpenAI raising less money affects far more than a single company. A whole web of dependencies has formed around the ChatGPT maker. Oracle signed a contract worth about $300 billion with OpenAI and is itself sitting on net debt of about $132 billion. The cloud provider CoreWeave has net debt of about $46 billion, and Nvidia holds a stake of about $30 billion in OpenAI. If OpenAI cannot finance the computing power it has ordered as planned, the entire supply chain will feel it. In early October, Oracle and CoreWeave had already dropped more than 5 percent and almost 8 percent in a single day as doubts about OpenAI’s ability to pay surfaced.

Then there is the competition for the same money. OpenAI was keen to lock in commitments before Anthropic’s I.P.O., which is expected in mid-November, according to The FT. The maker of the A.I. assistant Claude has already published its prospectus and is set to be valued at $1.5 trillion or more, The FT reported. Both companies are courting the same large institutional investors, and the Anthropic listing is currently tying up both capital and attention.

What Still Works in OpenAI’s Favor

Some numbers, however, speak for OpenAI. Even at $1.25 trillion, the ChatGPT maker would be the most valuable private company in history, and $20 billion is still one of the largest funding rounds ever. Growth also remains strong, according to media reports: Revenue reportedly rose 77 percent in the third quarter, and 107 percent in the enterprise business, although these figures are unaudited. OpenAI still expects a revenue run rate of $70 billion or more by the end of the year, according to media reports.

Mr. Altman himself has stressed that the postponed I.P.O. has little to do with market sentiment. The decisive factors, he said, are the debates over A.I. safety and the question of whether society is ready for that step.