French artificial intelligence leader Mistral AI is reportedly holding talks with Dubai-based investor MGX and others on a $1 billion equity funding round that would include hundreds of millions of euros in debt.

According to Bloomberg, which first reported the discussions, the debt would help to fund a new AI cloud service based in France called Mistral Compute. However, the discussions are still in their early stages and the details could change, Bloomberg said, citing unnamed sources.

If the round goes ahead, it would deepen the existing ties between Mistral and MGX, which are already working together with Nvidia Corp. to build the largest data center campus in Europe. Mistral and Nvidia said last month the data center is just one element of an initiative that aims to build the next-generation cloud service, which is a key element of France’s push for AI sovereignty.

French President Emmanuel Macron discussed the collaboration while sitting on a panel at the Viva Tech 2025 conference last month, where he said it would be a “game-changer” for the country and strengthen its technological independence.

Mistral Chief Executive Arthur Mensch was also sat on the panel, and he explained that the AI cloud would help to expand the company’s business model. It’s looking to move away from just developing large language models, and wants to be seen as more of a vertically integrated AI cloud provider.

“We’re still doing models, but on top of that we are going to be operating more of our software platform on digital assets that we’re deploying together,” he said.

Constellation Research Inc. analyst Holger Mueller said Mistral is probably overdue another raise, given that its last funding round came more than 12 months ago.

“AI companies need chips and compute and they cost serious money, so it’s not surprising it needs more funding,” the analyst said. “But what’s interesting is the sovereign AI angle, with Mistral looking to use the funds to build a data center in France. That suggests it’s increasingly looking to target French and maybe EU AI workloads in future. So it might not help Mistral compete in the U.S.”

Mistral AI has had a lot of momentum lately, releasing a new family of Magistral “reasoning” models that take time to consider their responses. That came last month, just days after the company announced an AI coding assistant called Mistral Code, which is a rival to other AI programming systems such as GitHub’s CoPilot. Earlier, in May, it launched the Agents API, which is an application programming interface for developers to build more sophisticated AI agents based on its LLMs, which can perform tasks autonomously for their users.

Also in May, Mistral said it had tripled its revenue in the previous three months, with most of the growth coming from Europe and “outside of the U.S.,” Mensch revealed to reporters. When pressed, he also insisted that the company has been “growing in the U.S. quite fast as well.”

Mistral does not disclose its revenue publicly, but according to one report, it generated more than $30 million in sales last year.

The company was last valued at $6 billion in June 2024 after closing on a $640 million funding round led by General Catalyst, with participation from Andreessen Horowitz, Lightspeed, Bpifrance, BNP Paribas, Nvidia Corp., Samsung Venture Investment Corp., Salesforce Ventures LLC and others.

Image: Mistral AI