OpenAI Can't Hit Its Target

OpenAI is now seeking about $20 billion at a $1.25 trillion valuation, down from its original $30 billion target at a $1.4 trillion valuation. The Financial Times says some investors reduced commitments after the AI market sell-off, with a Friday deadline for the first close likely to bring in less than $20 billion. UAE investment groups, including state-backed MGX, are expected to lead, potentially receiving an option to lease regional computing capacity. Founders Fund, Coatue, Sequoia, Andreessen Horowitz, and SoftBank also plan to participate, followed by a possible wealthy-individuals offering.

Anthropic’s updated S-1 reported nearly $17 billion in third-quarter revenue through September 30, versus $1.4 billion a year earlier, but also a $23.3 billion net loss. A $21.9 billion fair-value adjustment on convertible notes and securities accounted for most of that loss. Operating expenses rose 292% to $17.5 billion, including $5 billion in short-term computing costs and $12 billion in non-cash charitable-donation matching charges. Revenue growth was reduced by about $600 million because Anthropic cut prices on newer models, including Opus 5, and offered customer discounts amid cheaper open-weight competition.

The AI sell-off is tightening financing for companies that borrow heavily to build computing capacity. CoreWeave, Nebius, and Nscale have reportedly been shut out of the bond market as lenders demand tougher terms, while Nscale’s planned IPO was thwarted and Lambda lowered its fundraising valuation. Investors are worried about data-center delays, local political opposition, excessive stock and bond issuance, and the possibility that OpenAI, Anthropic, and hyperscaler profits will arrive more slowly than promised. Alphabet lost roughly $500 billion in market value after earnings, Intel fell 29%, and the Nasdaq dropped 2.9% on Friday.

The nervousness has spread beyond smaller AI companies: the cost of insuring debt issued by Amazon, Alphabet, Microsoft, Meta, and Oracle reached its highest level since 2021. Investors and tech executives are using put options and credit-default swaps to hedge concentrated technology holdings. Options tied to CoreWeave reached record volume in October, including contracts that pay if its shares fall to $35 from roughly $55. Solve’s Eugene Grinberg said every hyperscaler widened simultaneously, suggesting broad sector concern rather than one company’s credit problem; Oracle’s spread widened by more than one percentage point.

Marvell agreed to acquire optical-components maker Lumentum in a $115 billion all-stock deal, with Marvell shareholders receiving 67% of the combined company and closing targeted for the first half of 2028. The companies’ shares fell more than 10% and 5%, respectively, as investors questioned the price, limited cost-cutting opportunities, and the lengthy regulatory timeline. Marvell says AI data centers are shifting toward optical connectivity; Lumentum supplies photonic products, lasers, and other components that move data rapidly. The deal is intended to strengthen Marvell against Broadcom, whose custom-chip business competes for hyperscaler spending.

Anthropic confirmed that it added two sentences to Claude Code’s Opus 5.5 prompt telling the model not to recreate another person’s specific game, even if it is renamed or described as original, because that could infringe intellectual property. Anthropic employee Addy Osmani said original games, genres, and games based on users’ own designs and assets should still work, while the company continues adjusting the balance. Users reported refusals for game development and reverse engineering; the restrictions appear tied to Opus 5.5 in Claude Code, while one developer said switching to Opus 4.8 restored his workflow.