Microsoft & Mistral’s Multi-Billion-Dollar European AI Deal

Microsoft and Mistral, a French AI company that develops advanced LLMs, announced a new agreement to expand AI infrastructure in Europe. 

The deal, which represents a significant expansion of the companies' existing partnership, will also see Mistral’s AI models integrated across Microsoft's products. 

The partnership is positioned to help the French company build data centres in Europe and is slated to help both companies build a larger base of European customers. 

Currently, the two main players in the AI race are the US and China, with Europe lagging behind. Now, however, Microsoft looks to be seriously backing a European-led competitor in the AI race, despite its status at cloud partner of American firm OpenAI.

The French AI start-up is also reportedly in talks with the South Korean giant Samsung, it recently emerged. 

The multi-billion-dollar AI deal

Part of the deal covers integrating Mistral’s AI Models into Microsoft’s products. Mistral Medium 3.5 and OCR 4 are now available in Microsoft Foundry while Mistral Medium 3.5 is now in Microsoft Copilot Studio.

“Our mission has always been to put frontier AI in the hands of every organisation while keeping them in control of their technology,” says Arthur Mensch, Co-Founder and CEO of Mistral. 

“With Microsoft as our partner, our models reach enterprises and public institutions at global scale, delivered through a platform trusted for the most demanding, regulated workloads and available everywhere our customers operate.”

Mistral’s OCR 4 supports structured document-processing pipelines and agentic workflows and can be used for automation applications. 

Mistral Medium 3.5 brings an open-weight model that enables developers and enterprises to build, customise and deploy AI applications with control and sovereign deployment options.

The agreement builds upon the companies’ existing partnership, which was announced in 2024. 

European data centres

Underpinning the partnership is a multi-billion-dollar agreement focused on expanding AI infrastructure in Europe. 

Earlier this year, Mistral said it would invest US$1.43bn in new data centres in Sweden. Last year, Microsoft announced plans to increase its European data centre capacity by 40% over the next two years.

Microsoft says the agreement strengthens Europe’s AI infrastructure while helping it meet growing demand for cloud and AI services. To support the infrastructure buildout, Mistral is adding GPU capacity to increase compute power, drawing on thousands of NVIDIA Vera Rubin GPUs.

Ian Buck, Vice President of Hyperscale and High-Performance Computing, NVIDIA, says: “Agentic AI is driving unprecedented demand for high-performance, energy-efficient AI infrastructure.

“By deploying NVIDIA Vera Rubin systems at scale, Mistral and Microsoft will give customers the computing foundation they need to build and run the next generation of AI across Europe and beyond.”

European sovereign AI 

Mistral is positioned as a European-centric sovereign AI that can help firms to reduce their dependence on American AI.

Brad Smith, Vice Chair and President, Microsoft, says: “Europe should have access to the world’s most capable AI without compromising control over their data, operations or digital future.

“By bringing Mistral’s frontier European models into our sovereign cloud portfolio and enabling them across public cloud, cloud-connected and fully disconnected environments, we are honoring the European Digital Commitments we made and giving customers a trusted foundation for AI they can operate on their own terms.”

The EU is incredibly dependent on the US for AI services. In June, the Guardian reported that the EU Commission wants to ensure no foreign government or company has access to a “kill switch” to turn off or disrupt vital tech services across the continent, as part of an effort to cut dependencies on the US and China.

McKinsey recently argued that the biggest impediments to AI adoption across Europe are concerns over trust, security, and national dependency. 

In an article titled Accelerating Europe’s AI adoption: The role of sovereign AI, the consulting firm suggested that sovereign AI capabilities potentially provide greater flexibility in the form of national, economic, operational and technical independence.

Samsung’s reported talks with Mistral 

The Financial Times reported that Samsung is in talks to invest ‘hundreds of millions of euros’ in Mistral. It said Samsung could invest as much as €1bn (US$1.14bn) in the French AI group that is seeking to be a leading alternative to US tech. 

Ashish Patel, a Managing Director in Houlihan Lokey’s Capital Solutions Group, provided comments to AI Magazine about the development: “Increasing pressure from European governments is driving the agenda around European sovereignty, including efforts to reduce dependency on critical technologies that have historically been supplied by the US and China.

“Companies such as Mistral and Lovable have been vocal about the importance of sovereign European technologies, and this shift in market sentiment is increasingly being reflected in capital allocation decisions.”

The FT said the huge South Korean company is discussing an investment in Mistral as part of a broader fundraising round that could value the group at roughly €20bn (US$22.8bn), citing people familiar with the matter.