Microsoft backs Mistral’s European compute expansion

Microsoft has agreed to spend billions of dollars on Mistral’s computing infrastructure in Europe, expanding a partnership that will distribute the French startup’s AI technology through the U.S. company’s cloud and software platforms. Azure customers will be able to build software using Mistral’s data centers in France, giving Microsoft more European capacity and offering regulated industries an alternative to U.S.-controlled infrastructure.

Mistral is adding its Medium 3.5 and OCR 4 models to Microsoft Foundry, while Microsoft Copilot Studio is bringing on Medium 3.5. Businesses using independent data centers through Azure Local will also be able to run Mistral’s “open” models, which allow customers to develop AI as their own.

The agreement comes as interest grows in reducing reliance on U.S. technology for critical AI systems. Microsoft President Brad Smith and Mistral CEO Arthur Mensch said the partnership is designed to combine American and European technology while providing continuous access to Microsoft software and security features.

Smith said the deal does not include a new financial stake in Mistral, and Mensch declined to comment on a Bloomberg News report that Mistral was in talks to raise around €3 billion ($3.4 billion) at a €20 billion valuation. Mistral is targeting 1 gigawatt of compute capacity by 2030, with the companies also working on a joint go-to-market plan.