OpenAI Cuts Valuation Target to $1.25T Amid Weak Investor Demand

Key points

• OpenAI is finalizing a funding round of up to $30 billion at a pre-money valuation of $1.25 trillion.
• The valuation was reduced from an earlier $1.4 trillion target due to lack of investor enthusiasm.
• Investors from the United Arab Emirates and the firm Coatue are leading the financing.
• The round is positioned as a bridge to an initial public offering expected in 2027.
• OpenAI is simultaneously negotiating a deal to secure additional computing capacity from the UAE.

Background

OpenAI previously raised $122 billion in March 2026 at an $852 billion valuation. In September 2026, investors proposed a new round at $1.2 trillion, but OpenAI was not actively engaging in talks at that time. CEO Sam Altman has indicated that an IPO is unlikely before 2027 due to safety and alignment concerns.

How outlets are covering it

CNBC reports that OpenAI is close to finalizing the round and aims to secure signatures by the end of next week. The Financial Times highlights that the valuation was cut from $1.4 trillion to $1.25 trillion after Morgan Stanley and Dragoneer faced weak demand from private wealth clients, describing the reaction as a 'thud' compared to previous frenzies. Investing.com notes that the final size of the round remains under discussion and that OpenAI is seeking to secure commitments before rival Anthropic’s IPO disclosures invite direct comparisons. While CNBC emphasizes the deal as an 'opportunistic' bridge, the Financial Times points to investor fatigue and 'indigestion' from prior heavy investments in AI infrastructure.

Why it matters

This funding round is critical for OpenAI to secure capital and establish a valuation benchmark before its rival Anthropic goes public. The reduced valuation target reflects broader market skepticism regarding the sustainability of AI infrastructure spending and rising interest rates, which are complicating fundraising efforts across the tech sector.

What to watch

OpenAI has given prospective investors until October 30 to commit to the deal. The company may raise less than $30 billion depending on final investor interest. An IPO is targeted for the first half of 2027, though no specific date has been set.