OpenAI valuation cut to $1.25T amid AI trade volatility

OpenAI’s valuation was reduced from $1.4 trillion to $1.25 trillion, with the round size shrinking from $30 billion to $20 billion and only $11 billion committed. This occurred as AI-related stocks lost approximately $5 trillion in market cap over the prior week. Alphabet fell 12%, its largest drop in a decade, despite Google Cloud revenue doubling to $130 billion, representing 103% growth. Search revenue grew 12%, and free cash flow turned negative.

Anthropic’s net new bookings decelerated quarter-over-quarter, with GAAP revenue rising from roughly $5 billion in Q1 to $11 billion in Q2 and $17 billion in Q3. Analysts attributed the slowdown to pricing pressure, noting OpenAI is offering products at a 30% discount. CoreWeave debt yields reached 15%, and Broadcom is guaranteeing Anthropic’s debt, signaling stress in the AI infrastructure financing layer.

Harry Stebbings argued the valuation cut is rational price discovery relative to a larger, profitable competitor going public. He stated, "It is as simple as the other company is bigger, growing faster, profitable and about to go public so you can buy it liquid at 1.5 to 2 trillion." Jason Lemkin cited evidence of substantial pricing pressure and decelerating growth rates as sources of nervousness in the market.