According to people familiar with the matter, artificial intelligence company OpenAI has reduced the target size of its latest funding round by US$10 billion and is now seeking to raise US$20 billion at a valuation of US$1.25 trillion.
The company said last month that it aimed to raise US$30 billion at a valuation of US$1.4 trillion.
Three downward steps in one month of funding talks
The terms of this round of negotiations have shifted lower three times in a single month.
In mid-October, OpenAI was reportedly advancing a funding round of about US$30 billion at a valuation that could exceed US$1.4 trillion, with SoftBank Group, Abu Dhabi investment institution MGX and other existing investors discussing participation at the time; because the timetable was unusually tight, the company held intensive meetings with long-only funds and sovereign wealth funds last week.
Around October 22, multiple media reports said the valuation ask had dropped to US$1.25 trillion, about US$150 billion below the initial request; reports this week showed that UAE-linked funds and cross-market hedge fund Coatue Management were close to leading the investment.
By Friday, media confirmed not only the valuation shrinkage — even the fundraising target itself had been cut from US$30 billion to US$20 billion.
Racing the clock: ahead of Anthropic's listing
People familiar with the matter said at the time that OpenAI accelerated the process partly because it wanted to secure investor commitments before rival Anthropic's planned mid-November IPO — the two frontier labs are competing for the same pool of institutional money.
OpenAI had originally planned to launch a listing in early 2027, and the company has said it needs to strengthen its balance sheet first to address the risk that the IPO market worsens further and the listing plan is forced to be delayed.
Where the money is going: filling the gap in computing commitments
The funding pressure comes from the company's spending commitments.
According to internal investor documents, OpenAI expects a cumulative free cash flow shortfall of about US$278 billion from 2026 to 2030, more than double the US$122 billion funding commitment from its March round; the nominal total of computing and data center agreements signed over the past roughly 15 months exceeds US$1.4 trillion, about 35 times its current annualized revenue, including a five-year, US$300 billion computing contract with Oracle.
The documents also project that the company will not turn cash-flow positive until around 2030.
The story OpenAI tells investors is that growth is accelerating: the company says annualized revenue has reached US$50 billion and could rise to US$70 billion by the end of the year.
But those two figures rest on two different bases — investor documents obtained in early October showed annualized net revenue of about US$50 billion as of the end of September, counting only revenue OpenAI itself is entitled to; the roughly US$70 billion figure includes the total amount resold by cloud partners and was adjusted to benchmark against Anthropic.
When the gap between the two measures was exposed in early October, AI-related stocks and semiconductor shares briefly swung.
The market is repricing AI financing
This round of shrinkage comes as AI trades in public markets are undergoing sharp repricing: the Nasdaq 100 fell 6.7% in October, its worst month since March 2025; computing operators such as CoreWeave and Nebius fell more than 30% during the month; and credit protection costs for high-capex companies collectively hit new highs on the same day.
In contrast with OpenAI's chilly reception in the private market, Anthropic's prospectus reassured the market with concentration data such as "79% of revenue comes from outside the top five customers," and its IPO is still proceeding as planned.
Private-market giants bargaining down prices while public-market investors subscribe cautiously point to the same issue: the payback period for massive AI capital expenditure is being re-examined by all providers of capital.
For OpenAI, a smaller fundraising target also means that, before revenue catches up with spending commitments, it will still need to leave room for another round.
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