OpenAI’s $500 Billion Valuation Faces Huge Cut

It has been all good news for OpenAI this year. It reached a valuation of $500 billion. Its CEO, Sam Altman, stood next to President Trump in the White House early this year during the announcement of a new $500 billion Stargate AI infrastructure program. It settled a fight with Microsoft (its largest shareholder, with a 24% stake) over becoming a for-profit company. And it created financial partnerships with Oracle, Nvidia, Softbank, and AMD.

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• Challenges to OpenAI’s $500 billion valuation are starting to pile up.

• New investors may be cutting that valuation before they invest, affecting what OpenAI ultimately is worth.

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Some outsiders worry about this high valuation, in part because OpenAI says it will not make money until 2030 and may have to raise hundreds of billions of dollars to cover losses and investments in AI data centers.

OpenAI has held the lead in the artificial intelligence (AI) chatbot sector, a lead of as high as 80%. Moreover, it has led AI market share in the Apple App Store downloads.

OpenAI’s GPT-5 received tepid reviews after its recent release. Also recently, Alphabet released its new Gemini 3. There is already anxiety at OpenAI about the quality of its latest product. According to The Information, Altman said OpenAI employees “need to stay focused through short-term competitive pressure . . . expect the vibes out there to be rough for a bit.” Data shows the Gemini downloads have started to catch up to ChatGPT.

When private company valuations drop, investors sometimes face a “down round.” This happens when new investors cut the valuation of a company before they invest. This is often considered the primary yardstick for what a private company is worth.

The challenges to OpenAI’s valuation are starting to pile up. Its value is almost as high as Oracle Corp's (NYSE: ORCL) $572 billion. Oracle’s revenue in the most recent quarter was $14.9 billion. Net income was $2.9 billion. It has almost $11 billion on its balance sheet. Oracle is considered one of the leaders in the AI revolution.

OpenAI’s future prospects are under siege, and with that, so is its $500 billion valuation.

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