Why is OpenAI lowering its valuation to $1.25 trn ahead of potential IPO?

The ChatGPT maker has lowered its valuation goal to $1.25 trillion as it seeks fresh capital ahead of a potential stock market listing in 2027

 OpenAI has cut its valuation target to $1.25 trillion from $1.4 trillion after some investors resisted the higher price, the Financial Times reported. The ChatGPT maker is seeking to raise $30 billion ahead of a potential stock market listing in 2027.

 

The revised valuation would represent an increase of nearly 50 per cent from the company's current valuation of $852 billion.

However, the reported change hints at growing investor caution towards artificial intelligence (AI) companies amid market volatility and concerns about the rising cost of AI infrastructure.

 

Why OpenAI cut its valuation

 

According to the Financial Times, OpenAI is in the final stages of arranging the funding round, but investor demand has been weaker than in previous fundraising efforts.

 

 

Morgan Stanley and investment firm Dragoneer had earlier told the bank’s private wealth clients that OpenAI was seeking a valuation of $1.4 trillion before new investment. However, some investors were reluctant to invest at that price, the report said.

 

The valuation revision comes as US technology stocks face a sell-off, with investors questioning whether the rapid expansion of AI infrastructure, including data centres and computing capacity, can deliver sustainable returns.

 

Some investors are also experiencing funding fatigue after committing substantial sums to AI companies in recent years, reported the Financial Times.

 

Funding plans and IPO timeline

 

OpenAI has raised significant capital to support its expansion and computing requirements. The company secured $40 billion in March 2025, followed by a record-breaking $122 billion funding round in March 2026.

 

The latest fundraising effort aims to secure up to $30 billion as a bridge to its anticipated initial public offering (IPO), which could take place in the first half of 2027, according to the Financial Times.

 

Investment group Coatue and funds based in the United Arab Emirates are reportedly in discussions to lead the latest round. The deal could also give OpenAI the right of first refusal on new computing capacity developed by its partners in the UAE. Prospective investors have been given until October 30 to commit to the funding round.

 

OpenAI had been considering a stock market listing in 2026, but chief executive Sam Altman ruled out going public this year, citing concerns over AI safety. In September, he told Fortune that an IPO at this stage would be “ill-advised” as the company needed more time to address AI safety and alignment, which involves ensuring that AI systems behave as intended.  

 

AI rivals vie for investors

 

Competition for funding is another factor shaping OpenAI's fundraising plans. Its rival, Anthropic, has raised close to $100 billion this year and is expected to pursue a public listing.

 

Some investors are considering waiting to see how Anthropic prices its IPO before committing more capital to OpenAI. The two companies are competing for investor attention at a time when concerns about AI valuations and infrastructure spending are intensifying.