OpenAI raises less than half of $30B target

OpenAI has managed to secure roughly $11 billion in commitments for its latest funding round, significantly behind its initial $30 billion target, due to waning investor interest in artificial intelligence, according to a report by the Wall Street Journal. The startup's valuation has been set at $1.25 trillion, slightly below the $1.4 trillion goal it aimed for.

OpenAI has encountered difficulty attracting interest from major investors, with the industry's rapid expansion raising concerns about its financial viability. The company has reportedly scaled back its fundraising ambitions to as much as $20 billion and intends to approach family offices and high-net-worth individuals in the coming weeks to secure additional funds.

This setback occurs as OpenAI prepares for a potential initial public offering as early as next year. The weakening investor sentiment toward AI companies stems from disappointing earnings from industry giants such as Google, Amazon, and Intel, contributing to a broader decline in technology stocks. Moreover, OpenAI is facing increased competition from Anthropic, which reported a more than doubling of its revenue to $11.6 billion in the second quarter and even achieved a small operating profit during that period, compared to OpenAI's growing losses.

Anthropic is also set to go public soon, which could intensify pressure on OpenAI before its own anticipated market debut. Recently, OpenAI has managed to reclaim some market share from Anthropic by lowering prices for its latest AI models, according to third-party data cited in the report.