OpenAI IPO Valuation Target Reportedly Trimmed By $150B After Nasdaq 100 Registers Worst Month Since March 2025 Following Brutal Tech Sell-Off

According to a report by The Financial Times, OpenAI is now seeking about $20 billion at a $1.25 trillion valuation, down from its earlier target of $30 billion at a $1.4 trillion valuation.

• OpenAI had been seeking to raise $30 billion at a $1.4 trillion valuation, after pointing to a sharp increase in revenue since July to justify nearly doubling its valuation from $852 billion.
• The tech-heavy Nasdaq 100 fell 3.5% Friday, while the index registered its worst month since March 2025, adding pressure to companies tied to the AI trade.
• The report added that one OpenAI backer said that the fundraising process had begun amid enthusiasm for AI but was caught by a sharp reversal in the market.

OpenAI has reportedly cut its target for its latest funding round by $10 billion as the ChatGPT maker faces a tougher market backdrop and growing investor scrutiny of AI spending.

According to a report by The Financial Times citing people familiar with the matter, OpenAI is now seeking about $20 billion at a $1.25 trillion valuation, down from its earlier target of $30 billion at a $1.4 trillion valuation.

OpenAI Tempers Ambitions

OpenAI had been seeking to raise $30 billion at a $1.4 trillion valuation, after pointing to a sharp increase in revenue since July to justify nearly doubling its valuation from $852 billion.

But the company has since tempered its ambitions, with the report stating that OpenAI had set Friday as the deadline for investors to commit to the round. The initial close was expected to bring in less than $20 billion after some investors reduced their allocations, according to the report.

A consortium of investment groups from the United Arab Emirates, including state-backed technology fund MGX, is expected to be the largest participant. As part of the deal, OpenAI would have an option to lease newly developed computing power in the region, according to the report.

Founders Fund, Coatue, Sequoia Capital and Andreessen Horowitz, along with SoftBank, also plan to participate, the report said. OpenAI raised $122 billion in March.

Tech Sell-Off Puts AI Spending Under The Microscope

The fundraising reset comes after a sharp sell-off in technology stocks and growing concerns about the pace and scale of AI spending.

The tech-heavy Nasdaq 100 fell 3.5% Friday, while the index registered its worst month since March 2025, adding pressure to companies tied to the AI trade. The Nasdaq 100 index closed lower by 6.65% in October, its worst month since March 2025 when it fell 7.69%.

The report added that one OpenAI backer said that the fundraising process had begun amid enthusiasm for AI but was caught by a sharp reversal in the market.

The company is also facing competition for investor attention from Anthropic, which is preparing for an IPO next month at a valuation of $1.5 trillion or more.

Ives, Damodaran Weigh In On Anthropic IPO Risks

The Anthropic IPO could add another complication for OpenAI as investors weigh the two AI companies at the same time.

During an interview with CNBC, Yorkville Ives partner Dan Ives described the environment around Anthropic as a “perfect storm moment,” saying the company is “so key to this AI revolution build out.”

Ives continued to see a potential $1.5 trillion valuation for Anthropic despite the concerns. However, he acknowledged that Anthropic’s fundraising needs could put it “a bit in the penalty box” as AI companies compete for capital to fund infrastructure.

NYU Stern professor Aswath Damodaran focused on the market mood heading into the IPO.

“IPOs are all about mood and momentum,” Damodaran said, warning that the current environment could hurt Anthropic’s initial reception. He also described Anthropic, OpenAI and other parts of the AI ecosystem as deeply interconnected.

“They’re all connected at the hip. If one falls, they drag the others down with them,” Damodaran warned.

During the after-hours session on Friday, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, declined 1.77%; the Invesco QQQ Trust ETF (QQQ) fell 3.47%; and the SPDR Dow Jones Industrial Average ETF Trust (DIA) closed lower by 1.07%. Retail sentiment on Stocktwits toward the S&P 500 ETF was in the ‘bullish’ territory at the time of writing.

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