OpenAI Targets $30 Billion Raise as Nasdaq Falls 2.6% on AI Funding Concerns
Key Facts
OpenAI is targeting a raise of about $30 billion in a new funding round, according to a Bloomberg report published on October 22, as U.S. technology stocks fell in the same session amid concerns about financing the expansion of artificial intelligence. The Nasdaq Composite fell 2.6% on Thursday, while the S&P 500 lost about 1.2%, its worst daily performance since July, according to the Associated Press. The moves coincided with investor concerns about the rising cost of borrowing needed to build data centers and buy additional chips. These moves do not prove that OpenAI’s round alone caused the decline, but they put AI companies’ funding needs at the center of the market debate. Bloomberg said fundraising talks are ongoing and details may change.
Concern extended to companies whose plans rely on financing cloud-computing infrastructure, including CoreWeave, which borrowed to buy Nvidia chips and then leases them to customers through the cloud, according to the Associated Press. The agency said the stock had been volatile in recent weeks amid concerns related to the company’s debt. The model highlights the amount of capital required to expand computing capacity, combining borrowing to buy equipment with revenue from leasing it. At the same time, share prices of companies benefiting from the AI boom have prompted investor questions about whether their elevated levels are justified. Rising interest rates have also made borrowing to finance AI investment more expensive, the agency reported.
But trading on Friday, October 23, was not a uniform continuation of the previous session’s decline: the Nasdaq fell 0.2% after giving up a slight gain, while the S&P 500 dropped 0.5% and the Dow Jones 1.2%, according to the Associated Press. In contrast, Micron shares rose 2.5%, Intel gained 1.7%, Microsoft rose 0.7% and AMD gained 1.7% in the same session. EL7 data showed Nvidia closed at $210.96, while Meta closed at $642.62 on Friday. Available data did not include closing prices for Microsoft or AMD. Stephen Innes said, in a comment carried by the Associated Press, that major technology companies must prove the spending wave “is still worth the market’s confidence.”
Funding discussions are also linked to potential investors’ interest in the round: Bloomberg reported on October 5 that funds from the UAE, including MGX, had discussed participating and had considered investing up to $10 billion in total. That amount remains part of the funding talks as reported, rather than an announcement of a completed investment. With negotiations still open, the figures and details remain subject to change, according to Bloomberg. In the broader market context, an Associated Press report on October 26 said investors were watching major companies’ results and central-bank decisions during the week, with companies including Alphabet, Microsoft and Amazon preparing to report. The agency said investors were bracing for a wave of these results and decisions amid questions about the value of heavy AI spending.
Among the upcoming dates is the Federal Open Market Committee meeting on October 27 and 28, with the Federal Reserve scheduled to hold its press conference on October 28, according to the Federal Reserve calendar. The meeting comes as investors monitor the effect of interest rates on the cost of financing capital-intensive projects, including data centers and chips, against the backdrop described by the Associated Press. Available evidence did not indicate an expected outcome of the meeting or a decision on interest rates. Nor did the upcoming-events data include a documented date for the release of durable-goods orders, despite its inclusion in the initial draft. Major companies’ results and the central bank’s decision remain among the week’s key scheduled events, as reported on October 26.