OpenAI Trims Round to $20B at a $1.25T Valuation

OpenAI cuts its funding target to $20 billion

OpenAI has lowered its goal for the current round to as much as $20 billion, CNBC confirmed on October 31. The earlier ceiling was $30 billion. That's a $10 billion cut, and because the round hasn't closed yet, the final amount may still move.

The FT broke the story, and CNBC confirmed it with a person directly familiar with the deal. OpenAI didn't reply right away when CNBC asked for comment. CNBC has previously reported that investors from the United Arab Emirates are leading the round alongside investment firm Coatue.

Is the $1.25 trillion valuation pre-money or post-money?

It's post-money, according to the FT, which means the $1.25 trillion counts the cash OpenAI is raising. September's $1.4 trillion was a pre-money number, so the two figures sit on different bases and the gap between them isn't the drop in OpenAI's value. Measured before the new money on both sides, the decline would be larger by roughly the size of the round.

AI stock selloff hit the week of the round's deadline

OpenAI gave investors until Friday, October 30, to commit, and some of them committed less than planned, the FT reported. That Friday, Intel fell 25% on weak revenue guidance, Micron 5.5% and Nvidia 4%, CNBC reported. The slide capped a week in which Microsoft, Google and Amazon all posted capex figures or forecasts below what analysts expected.

OpenAI funding round first sought $30B at a $1.4T valuation

In September, OpenAI was trying to raise at least $30 billion from investors at a valuation of about $1.4 trillion. The figure excludes the money being raised, according to Bloomberg's October 9 report. Bloomberg says OpenAI is talking with several investment funds from the United Arab Emirates, Abu Dhabi's MGX among them, about anchoring the round.

The talks are still early. In its first report, Bloomberg said the terms could change and that OpenAI had earlier weighed a raise at $1.2 trillion. OpenAI declined to comment.

OpenAI valuation: $1.4T is pre-money, March's $852B included the cash

OpenAI's last round, in March, raised $122 billion at an $852 billion valuation that included the new money. The $1.4 trillion now on the table leaves the new money out. Because one number is post-money and the other is pre-money, dividing one by the other doesn't give a clean measure of how much the company's value has grown.

The round also stands in for the IPO that OpenAI had been preparing. Sam Altman said in September that "right now would be an ill-advised moment to go public," in part because of concerns about AI safety, CNBC reported. CNBC also noted that OpenAI recently pulled plans to launch GPT-6.1 Astra because the model did not meet its safety standards.

OpenAI revenue run rate is about $50B, with $70B expected by year-end

OpenAI's annualized revenue was roughly $50 billion at the end of September. Annualized revenue, or run rate, takes sales from a short recent period and scales them up to a full year, so it is an estimate rather than a year of booked sales. OpenAI shared the number with investors during the funding talks, per Bloomberg.

The company expects its run rate to reach or exceed $70 billion by the end of the year, driven mostly by its enterprise business. That $70 billion is also a run rate at a point in time, not a full-year total. Back in August, OpenAI had passed a $40 billion pace, Bloomberg reported.

Why the $68B OpenAI revenue figure was higher than $50B

Late last month, outlets reported that OpenAI's run rate was close to $70 billion; CNBC puts that figure at $68 billion. It included gross revenue from OpenAI's partners, so investors could line OpenAI up against Anthropic, CNBC reported. The roughly $20 billion gap comes from how sales are counted, not from lost business.

Anthropic books the full amount customers pay when they buy through cloud partners and records the partner's share as a cost, according to Axios reporting cited by The Decoder. On some partner deals, OpenAI books only its own share. Both methods follow U.S. accounting rules.

For comparison, Anthropic's run rate hit $65 billion at the end of July, Bloomberg notes. (Related: Anthropic Revenue Run Rate Tops $65B Ahead of IPO)

OpenAI enterprise revenue grew 107% in the third quarter

In its investor presentation, OpenAI said its total run rate grew 77% in the third quarter and its enterprise run rate grew 107%. A person familiar with the presentation gave the numbers to CNBC. Enterprise is growing faster than the business as a whole, which is why the year-end target leans on it.

Nvidia, Oracle and CoreWeave stock fell on the OpenAI revenue report

AI stocks dropped on Thursday, October 8, after the lower revenue number came out. Nvidia lost 3%, Oracle nearly 6% and CoreWeave nearly 8%, CNBC reported. AMD and Broadcom each fell 4%, Intel 5% and Super Micro Computer nearly 5%.

Tech shares led the S&P 500 lower that day. The Nasdaq 100 slipped 1.4% and a gauge of chip stocks fell 3.4%, per Bloomberg. CNBC wrote that OpenAI is under pressure to justify its $852 billion valuation ahead of the IPO.

OpenAI IPO date: 2027 at the earliest, Anthropic as soon as November

OpenAI has pushed its IPO back to at least next year, citing its focus on AI safety. It filed its prospectus confidentially in June, and executives have signaled a 2027 debut, according to CNBC. No date has been set.

Anthropic is moving faster and could sell shares as soon as November, Bloomberg reported. If OpenAI closes the new round, it could again top the valuation Anthropic got in its latest raise, Bloomberg wrote in its first report. (Related: Anthropic IPO: Date, Price and What Is Confirmed)

OpenAI turns to private investors ahead of an IPO

OpenAI is now raising up to $20 billion at a $1.25 trillion post-money valuation while its IPO waits until at least next year. Both headline numbers are reported on two different bases. The valuation is $1.25 trillion post-money against September's $1.4 trillion pre-money, and the run rate is about $50 billion net versus the $68 billion that counted partner sales the way Anthropic does.

Subtracting across those bases gives the wrong answer in both cases. The round isn't final, and the amount and price could still move.

Anthropic could still list first, as soon as this month, Bloomberg reported in October. None of these figures come from OpenAI itself, but from people familiar with the matter, as reported by the FT, Bloomberg and CNBC on October 8 and CNBC on October 31.