Tech

OpenAI Cuts Funding Round Target to $20 Billion at a $1.25 Trillion Valuation as AI Spending Draws Scrutiny

OpenAI is now seeking up to $20 billion, down from about $30 billion, at a reported $1.25 trillion valuation, CNBC confirmed Saturday, a day after S&P cut Meta's outlook over AI spending.

Nov 01, 2026 - 07:19

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OpenAI is seeking to raise up to $20 billion in its latest funding round, down from an earlier target of about $30 billion, CNBC confirmed on Saturday, October 31, 2026. The round has not closed and the figures could still change, a person directly familiar with the deal told CNBC.

The Financial Times first reported the $10 billion reduction and said the ChatGPT developer is seeking a post-money valuation of $1.25 trillion, according to CNBC. The FT also reported that OpenAI set a Friday, October 30, deadline for investors to commit to the round, and that some investors chose to reduce their allocations.

From $1.4 trillion to $1.25 trillion

OpenAI had previously aimed to raise $30 billion at a $1.4 trillion valuation, according to a Reuters report cited by Mint. The company lowered the valuation it was asking of new investors to $1.25 trillion on October 22, AI Affairs reported, citing Yahoo Finance. That account described both figures as pre-money asking prices and said OpenAI had told investors it aimed to get signatures by October 30.

Earlier in October, OpenAI pitched the $1.4 trillion figure to potential backers including BlackRock and the UAE investment fund MGX, and the proposed funding was described as a bridge ahead of a possible initial public offering, AI Affairs reported. As of October 23, the round had not been signed and its final size was still under discussion.

According to the FT report summarized by Mint, OpenAI was set to raise less than even the reduced $20 billion target at the Friday deadline because some investors cut their allocations. A consortium from the United Arab Emirates that includes MGX is expected to be the largest participant, and the arrangement gives OpenAI an option to lease new computing power in the Gulf region. Other investors include Andreessen Horowitz, Coatue, Founders Fund and Sequoia Capital, and a round for high-net-worth individuals is also expected, the report said.

Mint, citing the FT, also reported that OpenAI wants to complete the process before a planned initial public offering by rival Anthropic, which would draw on a largely similar pool of investors.

A week of AI spending questions

The smaller target follows a week in which investors questioned whether large technology companies' spending on artificial intelligence, particularly on data centers and graphics processors, will produce adequate returns, CNBC reported. The Nasdaq Composite fell about 2.9% on Friday to 25,437.00, leaving it about 7.8% below its record close of 27,599.79 on October 6, according to Yahoo Finance data.

On the same Friday, S&P Global Ratings revised its outlook on Meta Platforms to negative from stable while keeping the company's AA- credit rating, CNBC reported. The ratings agency said the outlook reflects "uncertainty" about Meta's elevated capital spending and its negative free cash flow, and questioned "Meta's ability to monetize its AI investments" compared with peers.

S&P said that although Meta has launched its Muse AI agent app and related foundation models, "it is unclear when these revenue streams will generate material contributions that exceed their rising costs over the next few years." The agency said it expects Meta's capital spending growth to start "flattening out beginning in 2028" but is "less certain that it will curtail its spending as previously anticipated."

"We respectfully disagree with S&P's assertion about Meta's AI monetization capabilities," a Meta spokesperson said in a statement. "We see significant product and business opportunities ahead of us, supporting our very strong credit profile."

Meta reported negative free cash flow of $2.12 billion in the third quarter, the first time it has gone negative, according to CNBC. Its shares closed Friday at $614.99, down about 15% in October from $725.18 at the end of September, Yahoo Finance data show. CNBC said it was the stock's worst month in four years.

What comes next

OpenAI has not publicly confirmed the final size of the round. CNBC's source said terms remained subject to change because the round is still in progress. The investors named in the reports either declined to comment or did not immediately respond, according to Mint.