OpenAI Cuts Valuation Target To $1.25 Trillion As Investors Push Back On $1.4 Trillion Price

OpenAI has reportedly lowered the value it hopes investors will place on the company from $1.4 trillion to $1.25 trillion. This happened after some investors felt the higher price was too much. The company behind ChatGPT is trying to raise another $30 billion as it gets ready for a possible initial public offering (IPO) in 2027. An IPO is when a company first sells its shares to the public. Even with the lower target, OpenAI would still be worth almost 50 per cent more than its current value of $852 billion.

OpenAI is trying to raise this money at an important time. It needs a lot of money to buy and build more powerful computing systems and compete with other big AI companies.

OpenAI is reportedly close to finishing plans for its latest round of fundraising. But fewer investors appear interested than during some of its earlier fundraising rounds, according to the Financial Times.

Morgan Stanley and investment company Dragoneer had earlier told Morgan Stanley's private wealth clients that OpenAI wanted to be valued at $1.4 trillion before receiving the new investment. Some possible investors did not want to put money into the company at that price. This reportedly led OpenAI to lower its target.

The change comes as US technology stocks have been falling in value. Investors are also asking whether the huge amounts of money being spent on AI will bring in enough money to make those costs worthwhile. This spending includes building data centres, which hold powerful computers, and adding more computing power.

Another worry is that investors may be getting tired of putting money into AI. They have already invested large amounts in AI companies over the past few years. Now, some are being more careful about investing even more.

OpenAI's Plan To Raise $30 Billion And Go Public

OpenAI has already raised large amounts of money to help its business grow and pay for its increasing computing needs. In March 2025, it raised $40 billion. Then, in March 2026, it raised a record $122 billion in another funding round.

Now, OpenAI wants to raise as much as another $30 billion. This would give the company more money before it possibly starts selling shares to the public. According to the Financial Times, OpenAI could hold its IPO during the first half of 2027.

Investment company Coatue and investment funds based in the United Arab Emirates (UAE) are reportedly talking about leading this new fundraising round. The possible deal could also give OpenAI the first chance to use or buy extra computing capacity built by its partners in the UAE before it is offered to others.

According to reports, investors who are thinking about joining the funding round have until October 30 to decide whether they will invest.

OpenAI had earlier thought about selling shares to the public in 2026. But its chief executive, Sam Altman, ruled out an IPO this year because of concerns about AI safety.

In September, Altman told Fortune that holding an IPO at this point would be "ill-advised," meaning it would not be a good idea. He said the company needed more time to work on AI safety and alignment. AI alignment means making sure AI systems act in the ways people want and expect them to.

Investors Worry About The High Cost Of Building AI Systems

OpenAI's decision to lower its target value is part of a bigger discussion about whether the rapid growth of AI can make enough money to keep going over time. Building advanced AI models costs a lot because companies need powerful computers, data centres and other important equipment and systems.

Companies are racing to make their AI systems more powerful. But investors are looking more carefully at how much this costs and how much money these investments might earn in return.

OpenAI needs to raise enough money to keep growing while also making investors believe the company will remain valuable in the future. Asking investors to accept a lower company value could make them more comfortable about investing. However, the final details of the fundraising round are still being discussed and could change.

OpenAI's possible IPO also means the company will need to show that its business can keep making enough money to support itself over time as it prepares to sell shares to the public.

Anthropic's Fundraising And IPO Plans Increase Competition

OpenAI also faces competition from other companies trying to attract investors. One of its AI rivals, Anthropic, has reportedly raised nearly $100 billion this year. Anthropic is also expected to sell shares to the public through an IPO.

According to the Financial Times, some investors are thinking about waiting until they have a clearer idea of how much Anthropic might be worth when it goes public before putting more money into OpenAI.

The price of Anthropic's shares during a possible IPO could give investors another way to judge how much major AI companies are worth. It could also affect how much investors believe other AI businesses should be worth when their shares are sold on public stock markets.