OpenAI has lowered the price tag on its latest funding round. The company is raising up to 30 billion dollars at a 1.25 trillion dollar valuation before the new money, down from the 1.4 trillion dollars it put to investors earlier in October, according to the Financial Times and Bloomberg. The cut came as investors held back ahead of rival Anthropic’s planned stock market listing, expected in mid-November.
Why did OpenAI lower its valuation?
Investor pushback, a weaker market and competition. Morgan Stanley and Dragoneer had shown the 1.4 trillion dollar figure to wealthy private clients, the FT reported, before it was revised to 1.25 trillion with Coatue and UAE investors leading. The FT later reported some investors cut their allocations and the round could close smaller than the full 30 billion. The backdrop is a tech selloff: the Nasdaq 100 fell roughly 10% over three weeks, and on October 30 Apple overtook Nvidia as the world’s most valuable company as chip stocks slid on doubts about AI spending.
Revenue matters too. OpenAI told investors its annualised revenue was approaching 50 billion dollars at the end of September, the FT reported, below what some had expected.
Is 1.25 trillion dollars still a big number?
Yes. It is about 50% above the 852 billion dollar valuation OpenAI reached in March after a record 122 billion dollar round. A markdown from a higher ask is not the same as a fall in value. What it does show is that investors are now negotiating on price instead of accepting whatever number is offered, which is a change from earlier in the year.
How does Anthropic’s IPO fit in?
It is the comparison everyone is watching. Anthropic, last privately valued at 965 billion dollars in May, is expected to list in mid-November. Reports of its target range from around 1.5 trillion to 2 trillion dollars, with some investors pushing for the lower end. If Anthropic prices above OpenAI’s private round, it would be the first time the newer lab has been valued above OpenAI on the open market, and it would give public investors their first direct way to buy into a frontier AI lab.
There is also a timing logic. Investors who can buy Anthropic shares on a public exchange in two weeks have less reason to rush into an OpenAI private round now, which helps explain the pushback. OpenAI has said its own IPO is not expected before 2027.
What does it mean for everyone else?
A cooling in the most expensive corner of AI tends to spread. Recent weeks saw sky-high valuations for new labs and huge infrastructure commitments. If the two leaders have to compete for the same investor money, smaller AI startups may find rounds harder and pricing tougher. For customers, the competition is good news: both labs need growth, which has so far meant better models at lower prices.
