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OpenAI Slashes Funding Target by $10B as Tech Stocks Sell Off

By Rohan Jaspal • November 1, 2026 • Updated November 1, 2026
OpenAI Slashes Funding Target by $10B as Tech Stocks Sell Off

OpenAI is learning what every startup eventually learns: you can’t fundraise against a falling market. The Financial Times reported on Friday that the ChatGPT maker has slashed the target for its latest funding round by $10 billion and now seeks about $20 billion, with its desired valuation dropping to $1.25 trillion from $1.4 trillion. Investors were given a Friday deadline to commit — and the first close is expected to come in under $20 billion after some backers trimmed their allocations.

Why the round shrank

The cut didn’t happen in a vacuum. US tech stocks have been selling off hard on worries about runaway AI spending: the Nasdaq dropped 2.9% on Friday alone and sits 7.8% below its all-time closing high from October 6. When public AI-adjacent stocks are sinking, private valuations get renegotiated fast.

A consortium of UAE investors, including the state-backed tech fund MGX, is expected to be the round’s largest participant — a sign that the marginal buyer of AI equity right now is sovereign money, not Silicon Valley.

The Anthropic race

There’s a strategic clock ticking here. OpenAI is reportedly pursuing a public listing in 2027, and it wants this round closed partly to get ahead of Anthropic’s imminent IPO — the two labs are courting the same investor base. Anthropic filed its S-1 on October 26, disclosing $16.3 billion in first-half revenue. OpenAI cutting its target while Anthropic marches toward the Nasdaq is not the look it wanted, but it’s the honest one: the market repriced AI risk in October, and OpenAI moved with it.

What it means

Don’t mistake a smaller round for a struggling company. Twenty billion dollars is still one of the largest private raises in history. But the days of valuations only going up are over — even for OpenAI. The next phase of the AI boom will be priced on cash flows, not vibes.

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