OpenAI has lowered its valuation target by $150 billion to $1.25 trillion as the ChatGPT maker approaches the final stages of negotiations for a fresh funding round of up to $30 billion. The revision comes amid growing investor scrutiny of the enormous costs of artificial intelligence development and uncertainty over how quickly those investments will generate returns.
The company had previously discussed a valuation of $1.4 trillion during the fundraising negotiations, according to people familiar with the matter cited by Bloomberg. Discussions remain ongoing, and the final valuation and funding terms could still change.
The proposed $1.25 trillion valuation excludes the new capital being raised. OpenAI last secured $122 billion in March at a valuation of $852 billion, making the latest negotiations another major test of investor appetite for the world’s most prominent AI companies.
Credits: NewsBytes
OpenAI funding round targets up to $30 billion
OpenAI is seeking to raise as much as $30 billion as it continues investing in artificial intelligence models, computing infrastructure and other resources needed to support its growing business.
Coatue Management is in discussions to co-lead the funding round, Bloomberg reported, citing people familiar with the matter. OpenAI has also held talks with several investment funds from the United Arab Emirates, alongside other potential investors, including BlackRock.
The company reportedly expects to finalise investor commitments by the end of next week. However, the fundraising target and valuation remain subject to negotiations.
The proposed valuation would place OpenAI among the world’s most valuable private companies, reflecting expectations that demand for AI-powered products will continue expanding. At the same time, the reduction from $1.4 trillion signals that even major AI players are facing pressure to justify their valuations as the cost of developing and deploying advanced models rises.
Why has OpenAI lowered its valuation target?
The valuation adjustment comes as investors reassess the economics of the artificial intelligence boom. Technology stocks declined this week following mixed quarterly results from companies including Meta Platforms and Tesla, intensifying questions about whether massive investments in AI infrastructure will deliver returns quickly enough.
Major technology companies are committing substantial sums to data centres, specialised chips and computing capacity to develop increasingly capable AI systems. While the technology promises new revenue opportunities, the costs of building and operating these systems remain substantial.
OpenAI faces similar challenges as it expands ChatGPT and develops more advanced AI products. The company must balance its ambitions to remain competitive with the need to secure sufficient funding for infrastructure, research and commercial expansion.
A lower valuation target does not necessarily indicate that investors have lost confidence in OpenAI. Instead, it highlights the changing expectations surrounding AI companies, where strong demand and rapid technological progress must be weighed against capital requirements and the uncertainty surrounding long-term profitability.
OpenAI IPO plans remain uncertain as Anthropic prepares to list
OpenAI’s fundraising discussions are unfolding alongside uncertainty over its plans to enter public markets. The company has pushed its anticipated initial public offering (IPO) to next year, citing its focus on AI safety efforts.
OpenAI confidentially filed its prospectus with the US Securities and Exchange Commission in June but has not announced a specific listing date. Chief Financial Officer Sarah Friar reportedly told employees in August that the company would be public in 2027. Chief Executive Officer Sam Altman subsequently suggested that going public at that point could be an ill-advised move.
Meanwhile, rival Anthropic is reportedly preparing for an IPO as early as next month. The company is said to be seeking a valuation of $1.5 trillion to $2 trillion after raising $65 billion in May at a valuation of $965 billion.
Anthropic’s proposed valuation could provide an important benchmark for investors evaluating the broader AI sector. Its market reception may influence how investors assess OpenAI’s own valuation and the prospects of other companies building advanced AI models.
Credits: Financial Times
DeepSeek’s $15 billion funding highlights China’s AI ambitions
The competition for AI investment extends beyond the United States. Chinese startup DeepSeek has reportedly raised approximately 100 billion yuan, equivalent to around $14.98 billion, in its latest funding round, according to four people familiar with the matter.
Investors reportedly include chipmaker GigaDevice, food delivery company Meituan and automaker Geely. DeepSeek’s pre-money valuation is said to stand at 500 billion yuan, while its fundraising target has doubled from an initial 50 billion yuan.
The reported investment highlights the growing interest of Chinese investors, including state-backed institutions and major corporations, in strengthening the country’s position in the global AI race.
