OpenAI Slashes Funding Target by $10 Billion, Retreats to $1.25 Trillion Valuation
OpenAI has cut its funding target by $10 billion and reduced the valuation it is asking from investors from $1.4 trillion to $1.25 trillion — a $150 billion retreat that marks the first time the company has been forced to negotiate its price downward during an active roadshow. The round, initially planned to raise $30 billion, was adjusted to $20 billion, and the "first close" is expected to fall below that figure, according to the Financial Times, which reported the news on Friday, October 30, 2026.
The reduction is not merely numerical: it reveals a structural shift in the power dynamic between OpenAI's founders and its investors. The company had been racing against the clock to close the round before Anthropic's expected IPO in mid-November, but the calendar worked against it. While OpenAI was pressuring investors to commit capital under a $1.4 trillion valuation, Anthropic's financial figures — leaked during IPO preparations — were redefining the minimum benchmark for evaluating any frontier AI lab.
According to leaks from Anthropic's S-1 filing reported by Bloomberg and the Bay Area Times, the rival generated $16.3 billion in revenue in the first half of 2026. The net result, however, was an $80.7 billion loss — primarily driven by increases in the fair value of its convertible notes, a mark-to-market adjustment that, in simple terms, reflects the rise of the company's own valuation. What OpenAI's investors did was look at that account and ask: if Anthropic, with its partially open books, burns $80 billion in losses to generate $16 billion in revenue, what kind of multiple is OpenAI asking when it demands $1.4 trillion for a stake in a company that still hasn't opened its own financials?
The answer was a $150 billion cut to the valuation and a $10 billion cut to the target. The current price of $1.25 trillion represents a multiple of approximately 25x on an annualized revenue run rate of $50 billion — significantly lower than the 28x multiple that OpenAI had initially offered. It is the first time, in any major private round, that OpenAI has had to concede numerically under market pressure. And the pressure came from multiple fronts.
The Wall Street Journal reported that, by October 30, OpenAI had secured only about $11 billion in commitments for a round that initially sought $30 billion — less than a third of the target amount. Some investors reduced their allocations, while others simply did not sign. The "first close" — the first tranche of money that actually enters the company — is expected to fall below $20 billion, meaning even the new target is a ceiling, not a guaranteed amount.
The market backdrop did not help. The Nasdaq Composite fell 2.9% on Friday, October 30, extending its decline to 7.8% from its record high reached on October 6. A single day of decline that was the largest since June 5, as reported by Reuters. Market reports described a destruction of approximately $2 trillion in Nasdaq value during October — the index's worst month in more than a year, according to CNN. It is hardly surprising that, in this environment, institutional investors are reluctant to deploy billions into a private company whose numbers cannot be audited.
OpenAI tried to force the clock. It set a Friday deadline for investors to confirm their commitments — a classic venture capital trick to create artificial urgency. But the deadline did the opposite of what was intended: it exposed that many investors wanted to commit less than expected, rather than more. When the pressure disappeared and investors could think clearly, hard math took the place of FOMO.
There is also a geopolitical dimension involved. The round includes sovereign compute agreements tied to UAE partners, with the $1.25 trillion valuation containing the strategic value of the right of first refusal on new computing capacity developed in partnership with MGX investors. It is a bundled enterprise value — it is not just financial capital, but access to critical infrastructure of chips and data centers that China and the US have been disputing for years.
What happens next is predictable: OpenAI will close the first tranche, announce that the round was "oversubscribed" against the new reduced target, and then reopen the full round after Anthropic's listing. If Anthropic debuts strongly — which is likely, given the momentum around the IPO — OpenAI will have a public comparable to show investors and justify the valuation. If the Anthropic listing is lukewarm or weak, OpenAI may need further concessions. Either way, the valuation cut has already sent a clear signal: the frontier AI market is entering a phase of pricing discipline, where hype alone is no longer enough. Investors want to see the money — and they are willing to pay less for it.
Sources: Reuters / FT via KELO, Wall Street Journal via Runtimewire, Bloomberg
✓ Independent sources cross-checked and verified before publishing
