OpenAI had to lower its target valuation from $1.4 trillion to $1.25 trillion. Where did all the hype go?

OpenAI, the developer of ChatGPT, has lowered its valuation target in a new round of funding to $1.25 trillion, the FT reports, citing sources. In total, the company expects to raise $30 billion before going public next year. Earlier this month, investors were quoted a valuation of $1.4 trillion, but some of them did not agree to it. However, even the reduced target is nearly 50% higher than OpenAI’s current valuation ($852 billion).

Morgan Stanley and the San Francisco-based technology fund Dragoneer offered the bank’s wealthy clients the opportunity to buy shares in OpenAI based on a valuation of $1.4 trillion, according to documents reviewed by the FT. But client interest turned out to be weaker than before, several sources familiar with the offering told the publication. “No one is rushing to buy,” said one of them. “Every time in the past when [OpenAI shares] were offered [to Morgan Stanley clients], there was a rush. This time, the response has been rather lackluster.”

Some investors are also tired of it—or have “had their fill,” as some FT sources put it—since they’ve already invested large sums in previous funding rounds. For example, in March of this year, OpenAI raised a record $122 billion, while Anthropic, its main competitor, has raised about $100 billion since the start of the year.

Other investors told the FT that, before investing in OpenAI, they want to see at what price Anthropic goes public. In addition, OpenAI lowered its valuation target just as shares of U.S. tech companies plummeted amid growing market doubts about the sustainability of the AI infrastructure boom, which was fueled by debt, the FT notes.

The investment round may be led by the U.S. investment firm Coatue and funds from the UAE: OpenAI is in talks with them, one of the sources told the FT. According to the source, under the terms of the future agreement, OpenAI will also receive preferential access to new computing capacity to be built by its partners in the UAE.

OpenAI aims to raise $30 billion as a “bridge” to its own IPO, the publication notes. A source close to OpenAI told the FT that the company expects to go public in the first half of 2027. Potential investors must make a decision by October 30, and if interest in the round proves weak, OpenAI may raise less than $30 billion. OpenAI declined to comment, and Coatue did not immediately respond to the FT’s request for comment.

Many in the market view Anthropic’s upcoming IPO as a key test of investor interest in AI, especially as investors are increasingly concerned about the industry’s massive costs, Yahoo Finance reported this week. According to the publication, this offering could surpass SpaceX’s June IPO and become the largest in history. Three people familiar with Anthropic’s plans told Yahoo Finance that the company could file its IPO prospectus as early as October 23.

The uncertainty surrounding the IPOs of OpenAI and Anthropic is affecting the entire U.S. stock market, according to Jimmy Chang, chief investment officer at the Rockefeller Global Family Office, as quoted by the FT. His office holds investments in both companies. “These companies need funding,” says Chang. And the market, he says, “needs to see a successful IPO.”

This article was AI-translated and verified by a human editor