OpenAI Cuts Valuation Target to $1.25 Trillion as Investors Balk at $1.4 Trillion Ask, Reports Say

OpenAI has lowered its valuation target to $1.25 trillion in its ongoing funding negotiations, $150 billion below the $1.4 trillion figure it presented to investors earlier this month, as some backers hesitate to pay the higher price, according to reports published on Thursday.

The funding round, which would raise up to $30 billion, is in its final stages, Bloomberg reported, citing people familiar with the matter. The people said the discussions were continuing and that the final terms could still change. CNBC independently reported the same terms, describing the round as a bridge financing ahead of a potential initial public offering.

The proposed $1.25 trillion valuation would exclude the new capital being raised, according to CNBC. OpenAI told investors on Thursday that it aims to have signatures locked in by the end of next week, the network reported, citing a person familiar with the company’s thinking. The company is also in talks to secure additional computing capacity from the United Arab Emirates through a commercial deal, according to the same report.

The pullback marks a striking retreat from the price OpenAI floated only weeks ago. Earlier in October, the company had presented a fixed $1.4 trillion pre-money valuation to prospective backers, including BlackRock and the Abu Dhabi fund MGX, Bloomberg previously reported. Morgan Stanley and the tech fund Dragoneer pitched the $1.4 trillion figure to the bank’s private wealth clients, according to reporting by the AI Affairs publication. One person familiar with the Morgan Stanley-led process described the response to the latest pitch as “a bit of a thud.”

Investors from the United Arab Emirates are expected to lead the round alongside US venture capital firm Coatue, according to CNBC. OpenAI most recently raised $122 billion in March at an $852 billion post-money valuation, a round it said was anchored by Amazon, Nvidia and SoftBank, with continued participation from Microsoft.

OpenAI has not confirmed the figures. The company declined to comment when approached by TechCrunch, according to that outlet.

The market has started asking harder questions

The valuation cut arrives in the same week that Wall Street punished big technology companies for their artificial intelligence spending. Meta fell more than 4 per cent over the week after its third-quarter results: the social media group beat revenue expectations but raised the lower end of its capital expenditure forecast to $135 billion from $130 billion and warned of some $825 billion in future spending commitments, according to multiple outlets.

The Nasdaq Composite slid 2.1 per cent over the week, its worst stretch since June, according to market data cited in startup and financial press coverage. Chipmakers suffered alongside the software names: Micron and Intel both dropped more than 5 per cent, while Alphabet gave up 2.9 per cent.

The selloff has sharpened the central question hanging over the industry: whether the colossal spending on data centres, chips and electricity will generate returns fast enough to justify it. According to reporting this week, Microsoft, Amazon, Alphabet, Meta and Oracle are expected to spend close to $700 billion combined on capital expenditure in 2026, increasingly financed with debt, even as bond yields climb. OpenAI itself told investors earlier this year that it expected to spend about $600 billion on computing by 2030.

The Financial Times reported that some investors were hesitant to invest at the $1.4 trillion price, and that investor demand has been weaker than in previous OpenAI funding rounds. One concern, according to the FT, is that investors are experiencing funding fatigue after committing large sums to AI companies in recent years. The paper also reported that investor demand for the round has been weaker than in previous OpenAI raises.

A bridge to a 2027 listing — if the market cooperates

The funding round is widely described in the coverage as a bridge to a possible initial public offering. OpenAI’s chief financial officer, Sarah Friar, has pointed to a likely 2027 IPO, according to coverage summarising recent statements, and the current raise would be the last substantial private round before the company faces public markets.

That timeline matters because the public market is where the valuation argument will finally be tested. Anthropic, OpenAI’s closest rival, is expected to go public first — Reuters reported earlier this month that Anthropic was targeting a listing as soon as mid-November. Its draft IPO filing, according to the same reporting, showed $80.7 billion in losses for the first half of the year and $518 billion in long-term compute commitments.

The two companies are also locked in a quieter battle over how revenue should be counted — OpenAI reports on a net basis while Anthropic counts gross contract value through cloud providers — a dispute that will shape how public investors value both businesses. Earlier reporting noted that some investors had argued Anthropic should debut at around $1.5 trillion rather than the $2 trillion figure the company was said to want.

According to the reporting on the current round, OpenAI wants the fresh capital both to fund infrastructure commitments and to provide a balance-sheet buffer in case IPO market conditions deteriorate. If the tech selloff continues, the company’s planned 2027 listing could slip — making the size and price of this private round even more important.

Analysis: Why It Matters

A $150 billion haircut is not a rounding error

OpenAI is still, by the reporting, worth roughly $1.25 trillion — a valuation that would make it the most valuable private company ever, by a wide margin. But the direction of travel is the story. Cutting the ask by $150 billion within a matter of weeks, after presenting $1.4 trillion as a fixed pre-money price, tells investors something about who is setting the price now. The “thud” response to the Morgan Stanley pitch suggests that even the most sophisticated private-market buyers have limits — and that those limits have moved closer.

The selloff is the context, not the coincidence

It is difficult to overstate how much the week’s market action matters here. When Meta’s stock falls 7 per cent on the day it raises its capital spending guidance, every private AI company hears the message: public investors are done paying any price for the AI buildout. OpenAI’s investors are largely the same institutions that trade Meta, Alphabet and Microsoft. A Nasdaq down 2.1 per cent in a week re-prices everything, including a private round that was already the largest in history. The valuation cut is OpenAI reading that room.

The Gulf money angle

One of the more telling details in the CNBC reporting is that UAE-linked investors are expected to lead the round — and that OpenAI is simultaneously negotiating a commercial deal for more UAE computing capacity. Sovereign money from the Gulf has become the marginal buyer in the largest AI rounds, precisely because traditional venture capital cannot write cheques this size. The reported combination of capital and compute suggests the fundraising is as much about securing physical infrastructure as it is about a balance-sheet number.

The IPO ladder is getting steeper

OpenAI reportedly wants to list in 2027, and Anthropic could arrive first. If Anthropic’s debut prices below its hoped-for $2 trillion — the investor debate reported by Reuters suggests some already want a lower number — then OpenAI’s own listing arithmetic gets harder, not easier. The current round’s valuation will be the reference point against which any IPO price is judged. Cutting it now may be painful, but floating a $1.4 trillion round and then watching a public listing undercut it later would be far worse.

The spending question nobody can answer yet

Underlying all of this is the unanswerable question of the moment: will $600 billion of compute spending turn into commensurate revenue? OpenAI is said to have told investors it expected $50 billion in annualised revenue after its GPT-6 Astra release, rising to $70 billion by year end — numbers that would still imply a valuation multiple that demands decades of growth. IBM’s experience this week is instructive: the company beat on revenue and profit and raised guidance, yet its shares slid anyway. Markets are no longer rewarding AI exposure; they are interrogating it.

What to Watch Next

1. The signature deadline. OpenAI told investors it wants commitments by the end of next week, according to CNBC. Whether it hits that target — and at what final price — will be the clearest signal of how deep the investor hesitation runs.
2. Who leads the round. Confirmation of the UAE investors’ role, and of Coatue’s position, will show where the marginal capital in AI is now coming from.
3. The compute deal. A separate commercial agreement for UAE computing capacity would underline how constrained the world’s supply of AI compute has become.
4. Anthropic’s IPO. If Anthropic lists in November as reported, its debut valuation will immediately re-price every assumption behind OpenAI’s own round — and its planned 2027 listing.
5. The market’s verdict. A sustained tech selloff through year end would tighten the IPO window further, testing OpenAI’s claim that this raise is merely a bridge rather than a lifeboat.

Sources

• TipRanks — OpenAI Lowers Valuation to $1.25 Trillion Ahead of Potential IPO (citing Financial Times)
• Mint / Bloomberg — OpenAI cuts valuation target by $150 bn to $1.25 tn
• Startup Fortune — OpenAI trims its own valuation target to $1.25 trillion before IPO (citing Bloomberg, CNBC, TechCrunch)
• The AI Pin — OpenAI eyes $30B raise at $1.25T valuation, reports say (citing Bloomberg, CNBC)
• AI Affairs — OpenAI lowers funding valuation target to $1.25 trillion from $1.4 trillion