OpenAI targets $1.25 trillion valuation for $30 billion round

OpenAI is nearing a funding round of up to $30 billion at a proposed $1.25 trillion valuation, below the $1.4 trillion initially discussed with investors, as negotiations enter their final stages.

The revised figure represents a $150 billion reduction in the ChatGPT developer’s valuation target, although the financing remains under discussion and neither the amount raised nor the final price has been confirmed. OpenAI has not publicly announced an agreement or disclosed binding commitments for the proposed round.

The valuation under discussion is understood to be calculated before the injection of fresh capital. Raising the full $30 billion on those terms would lift the company’s implied valuation after financing to approximately $1.28 trillion. That would still be substantially higher than the $852 billion valuation attached to its March fundraising.

Investment firm Coatue Management is among the prospective lead investors, while funds based in the United Arab Emirates have also been involved in discussions. BlackRock has been identified among the institutions approached during the fundraising process, although participation and individual commitments have not been confirmed publicly.

OpenAI is seeking to secure investor commitments by the end of next week, with an October 30 deadline under consideration. The ultimate fundraising total could fall below $30 billion if investors decline to subscribe for the full amount. The company has declined to comment on the negotiations.

The adjustment follows resistance among prospective backers to the higher valuation initially sought. The proposed financing comes amid greater scrutiny of artificial intelligence companies’ capital requirements, particularly their commitments to expensive computing infrastructure and the extent to which expanding revenue can support those costs.

The timing is also significant because OpenAI is preparing for a possible stock market flotation in 2027. The private placement would provide additional funding before any listing, without requiring the company to expose its valuation immediately to public market trading. An initial public offering has not been formally scheduled.

Investors are simultaneously assessing the anticipated flotation of Anthropic, a competing developer of artificial intelligence models. Its potential market debut has intensified comparisons of growth, financing needs and valuations across the sector. The pricing of any such offering remains uncertain, and private fundraising figures do not establish the prices public investors will ultimately pay.

OpenAI’s proposed valuation would nevertheless imply an increase of roughly 47 per cent over its March valuation, even after the reduction from the earlier target. That comparison involves different financing rounds and does not represent a realised gain for existing shareholders, whose stakes remain subject to the terms of the company’s capital structure.

The March transaction brought in $122 billion in committed funding, establishing one of the largest private capital raises on record. Its scale illustrates the amount of external financing OpenAI has already attracted, but the new negotiations indicate that demand at a higher valuation cannot be assumed merely because previous rounds were heavily subscribed.

The company has been expanding its commercial operations while committing substantial resources to computing capacity needed to train and operate increasingly powerful models. Its infrastructure requirements have become central to discussions with financial investors and technology partners, because access to processing power affects both product development and the cost of delivering services.

A potential arrangement with investors from the UAE could also involve access to additional computing capacity, although no final agreement on such terms has been disclosed. Any link between financing and infrastructure provision would need to be assessed separately from the valuation placed on OpenAI’s shares.

Market conditions have added another complication. Technology shares have come under pressure following mixed corporate earnings and questions about returns on heavy spending on artificial intelligence. That backdrop has made the pricing of large private transactions more sensitive, particularly for companies contemplating public listings.

SoftBank Group remains a major existing shareholder. On October 1, the Japanese investment company announced completion of a further $10 billion investment, bringing its cumulative investment in OpenAI to $64.6 billion and its ownership interest to approximately 13 per cent.

SoftBank also disclosed that it had repaid its earlier bridge borrowings and cancelled unused capacity, distinguishing that separate financing arrangement from OpenAI’s proposed new equity fundraising.

SoftBank said that final instalment completed the $30 billion follow-on investment programme it had previously announced. The payment was funded through proceeds from foreign currency-denominated senior notes, according to the group’s corporate disclosure.