Is the AI Funding Boom Starting to Crack? OpenAI Cuts Target by $10 Billion

TLDR:

• OpenAI now seeks $20B at a $1.25T valuation, down from $1.4T, after cutting its target by $10B.
• CoreWeave’s five-year CDS spread topped 1,100 basis points in mid-October as its bonds fell below 80%.
• Blackstone, an anchor investor, warned Anthropic may not earn an investment-grade rating after its IPO.
• Citigroup sees over $2.8T in AI infrastructure spending through 2029; Morgan Stanley sees a $1.5T gap.

Is the AI funding boom starting to crack? The question has gained attention after the Financial Times reported two new setbacks for the sector.

OpenAI cut its funding target by $10 billion and now seeks $20 billion at a $1.25 trillion valuation. Blackstone also warned that Anthropic may not receive an investment-grade rating after its IPO.

Goldman Sachs estimates investors had lent AI-related companies about $500 billion in 2026 by early October.

Two Setbacks Raise Questions About AI Funding

Coin Bureau raised the question in a post on X. The post said OpenAI slashed its funding target by $10 billion. Its new goal of $20 billion comes at a $1.25 trillion valuation, down from $1.4 trillion.

The second setback involves Anthropic. Blackstone is an anchor investor in the company’s $63 billion chip financing deal. It warned that Anthropic may not get an investment-grade rating following its IPO.

Lending to the sector has grown quickly. Goldman Sachs estimated that investors lent AI-related companies about $500 billion in 2026 by early October. Meanwhile, the cost of insuring several AI-linked companies’ debt against default rose sharply in October.

Credit Markets Show Early Stress

Credit default swap spreads show how the AI funding boom looks to lenders. CoreWeave’s five-year spread topped 1,100 basis points in mid-October.

Oracle’s reached roughly 300 basis points in October. Meta’s hit a record 114.79 basis points on October 22, after its earnings.

CoreWeave’s bonds also came under pressure. They fell below 80% of face value, and the yield approached 15% on Thursday, according to SiliconANGLE and Naked Capitalism. The company already carries roughly $52 billion in debt and lease obligations.

Oracle’s Project Jupiter adds another example. The 1,400-acre campus sits in Doña Ana County, New Mexico. About $18 billion in related loans trade at 89 to 91 cents on the dollar.

Permit denials, environmental litigation and construction delays pushed the timeline back by at least seven months. As a result, Oracle reportedly invoked force majeure, and its credit rating slipped to BBB-, one notch above junk.

Borrowing Pace and Spending Forecasts

The FT reported that America’s roughly $10 trillion AI infrastructure buildout is starting to fray. Hyperscaler debt issuance reached $121 billion in 2025, four times the historical average. Bank of America expects another $100 billion in 2026. The pace resembles the dot-com era telecom buildout.

PIMCO estimates that hyperscaler capex absorbs 93% to 94% of operating cash flow. Private credit is filling part of the gap.

Apollo and Blackstone finalized a $35 billion package in June, called Project Big Sky. It funds Anthropic’s lease of Google-designed tensor processing units. Blackstone has since pitched a follow-up of roughly $36 billion.

Spending forecasts keep rising despite these signals. Citigroup now expects tech giants to spend more than $2.8 trillion on AI infrastructure through 2029.

Morgan Stanley estimates a $1.5 trillion funding shortfall against $2.9 trillion in data center capex between 2025 and 2028. Meanwhile, Barclays cut Dell, Hewlett Packard Enterprise and NetApp to hold on October 15.

Those stocks, with Oracle and CoreWeave, lost about $80 billion in one session. Barclays found businesses put only about 5% of IT budgets toward AI, and a quarter of that goes to hardware.

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