OpenAI Cuts Funding Target by $10 Billion as AI Market Sentiment Shifts

OpenAI has reduced the target for its latest funding round from $30 billion to about $20 billion, lowering the valuation from $1.4 trillion to $1.25 trillion, according to the Financial Times and Reuters. The move comes as a broad selloff in technology stocks and growing investor anxiety about AI capital expenditure reshape the funding environment for frontier labs.

The numbers and the timeline

The ChatGPT maker had been pitching a $30 billion raise at a $1.4 trillion valuation as recently as last month, positioning the round as a final private-market entry point before an expected initial public offering next year [1]. By October 22, CNBC reported the valuation had already been set at $1.25 trillion, though the $30 billion target remained [7]. The Financial Times, citing multiple people with knowledge of the matter, said OpenAI is now seeking about $20 billion at that $1.25 trillion valuation [1].

A Friday deadline for investor commitments — described as a "first close" — is expected to bring in less than the new $20 billion target after some participants reduced their allocations [1]. A subsequent retail offering for wealthy individuals could expand the total to roughly $20 billion, one person said [1].

Both companies confidentially filed prospectuses with regulators in June [7].

Market context: a sharp reversal

The retrenchment coincides with a brutal week for tech equities. The Nasdaq 100 fell 3.5 percent on Friday, according to the Financial Times [1], while Reuters reported the Nasdaq index dropped 2.9 percent on Friday and is down 7.8 percent from its October 6 peak [2]. Alphabet's shares dropped after it raised 2026 capital spending guidance to $195–205 billion and warned 2027 would go higher [3]. Intel shares fell nearly 20 percent from September highs [3]. Microsoft, OpenAI's largest partner, announced a $25 billion bond sale — its first in over nine years — to fund AI infrastructure, with orders exceeding $100 billion [4].

One of OpenAI's backers told the Financial Times the group "had kicked off the fundraising process amid enthusiasm for the AI trade but had been caught out by a sharp reversal in the market" [1].

Investor syndicate and strategic ties

A consortium of United Arab Emirates investment groups, including the state-backed fund MGX, is expected to be the largest participant. As part of the arrangement, OpenAI would receive an option to lease newly developed computing capacity in the region [1]. Venture firms Founders Fund, Coatue, Sequoia Capital, and Andreessen Horowitz, along with SoftBank, also plan to participate [1].

Secondary reporting indicates SoftBank's commitment has shrunk from $30 billion to $20 billion [3]. Secondary reporting also states Nvidia, which earlier discussed investing up to $100 billion, settled on a $30 billion commitment, with CEO Jensen Huang noting the original figure was never binding [3].

Revenue questions and competitive pressure

Earlier in October, the Financial Times reported OpenAI's annualized revenue run rate stood at close to $50 billion at the end of September — roughly $20 billion below the nearly $70 billion figure that had circulated earlier in the year, according to a summary by startupfortune.com [3]. OpenAI pointed to a rapid increase in revenue since July to justify a near doubling of its price tag from $852bn [1]. OpenAI has not disputed being on pace for $70 billion in annualized revenue by the end of 2026 [3], but the gap rattled the same investor base now being asked to fund a trillion-dollar valuation.

Meanwhile, rival Anthropic is preparing for a public listing as soon as mid-November at a valuation of $1.5 trillion or more, competing for the same pool of capital and attention [1][2].

What remains uncertain

The final size of the round, the exact composition of the investor syndicate, and whether the $1.25 trillion valuation holds once commitments are counted are not yet known. OpenAI declined to comment on the changes [1][2]. The company raised $122 billion in March [1] but has said it plans to spend multiples of that on computing power [1]; CNBC reports OpenAI told investors in February it is targeting roughly $600 billion in total compute spend by 2030 [7]. CEO Sam Altman has publicly acknowledged an AI bubble while promising OpenAI would spend "more aggressively than any company who's ever spent on anything ahead of progress," according to secondary reporting [3].

For now, the lab that set the pace for AI fundraising is trimming its sails — not because the money has disappeared, but because the terms on which it arrives are changing.