OpenAI, the US-based artificial intelligence research firm behind popular generative AI models, has scaled back both its target fundraising amount and valuation goal amid persistent selling pressure on tech stocks and AI-focused companies.
Tech sell-off impacts OpenAI’s capital plans
The Nasdaq 100 index has fallen approximately 10% over the past three weeks from its record level reached on October 6, with a sharp 4.5% drop last Friday. This continued downturn has intensified valuation pressures on technology companies, particularly those in the artificial intelligence sector.
OpenAI reportedly aimed to raise $30 billion with a target valuation of $1.4 trillion in its next financing round. However, recent updates indicate the company is now considering raising about $20 billion at a valuation of $1.25 trillion.
Both the planned funding amount and the targeted valuation in OpenAI’s new investment round have been revised downwards as a result of changing market conditions.
Competition extends beyond the stock market
Factors influencing OpenAI’s search for capital are not limited to volatile equity markets. The company is also competing with Anthropic, another leading AI firm based in the US, for investor attention. According to reports, Anthropic intends to hold an initial public offering in November, targeting up to $100 billion in new capital at a $1.5 trillion valuation.
OpenAI previously postponed any plans for a public listing until at least 2027. As a result, the company has focused on raising funds via private markets in the short term instead of pursuing an IPO.
Mini dictionary: Anthropic is a US-based artificial intelligence research company specializing in large language models and a direct competitor to OpenAI in the generative AI sector.
Valuations adjust as investor caution grows
Expectations of strong growth from artificial intelligence companies fueled rapidly rising valuations over the past two years. However, the latest wave of selling in technology shares has prompted investors to take a more cautious approach to pricing, with OpenAI’s moves reflecting this trend among private market deals as well.
| Company | New fundraising target | Target valuation |
|---|---|---|
| OpenAI | $20 billion | $1.25 trillion |
| Anthropic | up to $100 billion | $1.5 trillion |
OpenAI’s revised strategy highlights that access to large-scale funding remains possible in the AI sector, but terms have become increasingly stringent. Appetite for major investment rounds now appears more sensitive to realistic valuation levels rather than previous periods of breakneck growth expectations.
The Nasdaq 100’s roughly 10% slip in three weeks has intensified funding challenges for AI-linked companies.
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