The AI arms race is accelerating. The money is starting to look stretched. Eve… · @keepit3years · TwKit

@keepit3years

The AI arms race is accelerating. The money is starting to look stretched. Even OpenAI is lowering its price to secure funding. According to the Financial Times, Bloomberg and CNBC, OpenAI has cut its latest pre-IPO fundraising target from $30 billion to about $20 billion, while lowering its target valuation from $1.4 trillion to $1.25 trillion. That’s a one-third cut in the fundraising target and roughly an 11% reduction in valuation. The Wall Street Journal reported that OpenAI had secured about $11 billion in commitments at the time of reporting. The round remains open, so that is not the final total. Why the rush? Reuters previously reported that OpenAI wanted to lock in funding before rival Anthropic’s expected November IPO. The two companies are competing for much of the same investor capital. To me, this is a sign that the money is starting to run thin. One company after another is seeking a trillion-dollar valuation. One funding round after another demands tens of billions of dollars. Behind it all, spending on compute and data centers keeps growing. Even deep pools of capital have limits when everyone reaches in at once. Now OpenAI is lowering both its valuation and its fundraising target, trying to get the money secured. The competition among AI companies is expanding from chips and talent to capital itself. You can pitch the next generation of technology. You still need enough cash to reach the next funding round.

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