Mistral AI might not be a household name just yet, but the AI start-up is among the most promising out there, especially after scoring one of the biggest seed rounds ever for a newly started company.
It's no secret, after all, that artificial intelligence is hot right now. Stocks with direct exposure to AI, like Nvidia (NVDA 3.08%) and others have soared since the launch of ChatGPT, and a broad range of companies are touting their artificial intelligence strategies on earnings calls and at investor conferences.
The excitement around AI is also building in the start-up market as well, and one of the new companies that investors are most excited about is Mistral AI, a start-up based in Paris. Mistral, which refers to a strong, cold wind that blows through parts of France and often brings better weather, is a start-up founded by three top AI researchers.
Its founders are CEO Arthur Mensch, a former researcher at Alphabet's (GOOG 1.72%)(GOOGL 1.54%) DeepMind; Chief Technology Officer Timothée Lacroix, an ex-software engineer at Meta's (META -1.73%) AI division; and Chief Science Officer Guillaume Lample, also formerly of Meta, where he led the development of LLaMA, the Facebook parent's large language model.
Mistral AI was founded in May 2023, and the company raised $113 million just four weeks later with an estimated valuation of $260 million, a sign of how much confidence venture capital (VC) investors have in the founders and how much potential they see in AI.
As of its most recent funding round in June 2024, the company was valued at $6 billion after it raised $500 million and $140 million in debt. The round included a number of prominent VC firms like Andreessen Horowitz and Lightspeed Venture Partners, as well as Nvidia and the venture arm of Salesforce (CRM 2.21%).
Artificial Intelligence
The company aims to compete with OpenAI, developing large language models, including Mistral Nemo and Mistral Large 2, and other generative AI tools using an open-source model focused on selling to enterprise customers rather than individual consumers. The company intends to build its models from publicly available data, and users will be able to upload their own datasets as well.
Mistral has launched Le Chat, an AI chatbot like ChatGPT, and it also offers a platform that allows users to build their own custom AI agent or deploy a model from their own data. The company is still small with fewer than 50 employees, according to its Linkedin page.
Is it publicly traded?
Is Mistral AI publicly traded?
Mistral AI is not currently a publicly traded company.
It was founded in May 2023 and has released two large language models, a chatbot, and an open-source platform that anyone can use.
The company held a highly successful seed funding round, and has followed that up with more funding rounds, which have brought in hundreds of millions of dollars.
Reaching a valuation of $6 billion little more than a year after its founding, Mistral AI is one of the most promising AI start-ups around.
IPO
When will Mistral AI have an IPO?
It typically takes several years for a start-up to go from being founded to going public, so it's too early to speculate when Mistral might go public. Any guess at the timing of an initial public offering (IPO) would be just that -- a guess. Even OpenAI, the leading AI start-up, is still privately held, although its unique corporate structure complicates an IPO.
During the dot-com boom in the late 1990s, a number of tech companies went public shortly after being founded since there was enormous investor demand for internet stocks at that time. However, many of those companies that quickly went public ended up going bankrupt after the bubble burst.
One example of a company that quickly went public in that era and eventually became successful is Amazon (AMZN 0.73%), which was founded in July 1994, opened for business in July 1995 and went public in May 1997.
Mistral's valuation of $6 billion just a year after being founded is the latest example of how the AI boom is exhibiting some of the same characteristics as the dot-com era; a number of stocks seem to have rallied just because they have AI in their name.
It's possible that Mistral will follow in the footsteps of dot-com-era companies like Amazon and go public soon, but the company seems to still be a long way from that, especially since it's easily able to raise money from venture capitalists and other investors. With that in mind, any talk of an IPO is premature at this point.
For another comparison, OpenAI was founded in December 2015 and did not launch ChatGPT, the product that made it famous, until November 2022. OpenAI has no plans to go public, and the company is well funded since Microsoft (MSFT -0.1%) has invested roughly $13 billion in it.
How to buy Mistral AI stock
How to buy Mistral AI stock
Since Mistral AI Stock isn't publicly traded, you can't currently buy its shares. Only a handful of venture capital and other investors own shares in the company.
Waiting for the company to go public is the easiest way to be able to buy the stock, but you may be able to get exposure earlier than that if, say, a publicly traded company takes a stake in Mistral AI, similar to how Microsoft has become a major investor in OpenAI or how Amazon acquired a significant stake in Rivian (RIVN 5.9%) prior to the electric vehicle maker's IPO. A number of publicly traded companies, including Nvidia, Microsoft, and Salesforce, have taken small stakes in Mistral.
If you're looking for ways to get exposure to generative AI, there aren't any pure-play publicly traded stocks that offer that, but you could consider investing in big tech companies like Microsoft or Alphabet, which are aggressively investing in generative AI, or chip giant Nvidia, which has established itself as the clear leader in AI chips, especially those used for generative AI.
Generative AI
Profitability
Is Mistral AI profitable?
Mistral AI unveiled its first product in September 2023, and the company's revenue is likely negligible so far.
Privately held companies don't report financial results, but since Mistral AI was only founded in May 2023, the company was likely not spending much money yet. It only had a handful of employees and used an open-source model for its technology, which is cheaper than the closed models favored by OpenAI and others.
Most of the company's expenses are likely to go to employee salaries, but it will also have to pay for things like tech infrastructure, including cloud-hosting expenses that can be expensive for generative AI applications, and basic needs like office space.
However, after raising close to $1 billion in cash, cash burn should not be a concern for the company.
Should I invest?
Should I invest in Mistral AI?
Mistral AI isn't publicly traded, so retail investors don't currently have the ability to invest in it.
Regarding the question of whether they should invest in it, it's really too early to know since Mistral AI's products are new, the competitive landscape is evolving quickly, and its financials are unknown.
Investors who are interested in the company should pay attention to its product development and any other news from the company.
Now that it has some products on the market, investors can evaluate them and how they compare with other generative AI applications, such as OpenAI's ChatGPT.
ChatGPT, for example, caught fire after its release, racking up 100 million users in just two months and showing the product had clearly found an audience. Without a first-mover advantage, Mistral AI's chatbot hasn't been as rapidly embraced as ChatGPT.
Exchange-Traded Fund (ETF)
ETFs
ETFs with exposure to Mistral AI
Since Mistral AI is not publicly traded, no ETFs have exposure to the stock.
However, if you're looking for ETFs that offer some exposure to AI stocks, there are some good options.
Some of your best bets include the Global X Robotics & Artificial Intelligence ETF (BOTZ 1.54%), the ROBO Global Robotics and Automation ETF (ROBO 0.83%), and the iShares Robotics and Artificial Intelligence ETF (ARTY 1.13%).
Those AI ETFs offer exposure to a wide range of AI stocks in areas like autonomous vehicles, robotics, and generative AI.
Related investing topics
The Foolish bottom line on Mistral AI
There's no question that Mistral AI is one of the more exciting AI start-ups in the artificial intelligence industry. Alphabet and Meta, where its founders worked, are among the most respected companies in AI. It makes sense that venture capital investors are betting on this trio of founders. The company's seed round set a new record for European companies, and it did so remarkably quickly, just a month after being founded. It also raced to a valuation of $6 billion little more than a year after being founded.
However, it's too early to determine Mistral's chances of success.
The company is still building its business, developing its products, and investing in growth. Most of its valuation is attached to its potential at this point, and that's hard to value, especially in a rapidly evolving industry like artificial intelligence.
Mistral could become a major player in AI, and the deep pockets backing the company will certainly help. However, the company is still unproven, and up against several big tech companies that have been rapidly investing in AI since ChatGPT demonstrated its value to the world.
FAQ
Investing in Mistral FAQs
How long has Mistral AI been around?
Mistral AI was founded in May 2023 by Arthur Mensch, Guillaume Lample, and Timothée Lacroix. The company raised $400 million in its most recent funding round in June 2024 at a valuation of $6 billion.
What does Mistral AI do?
Mistral AI aims to compete with Open AI by developing large language models and other generative AI tools. Unlike OpenAI, it's using an open-source model, which is cheaper to run. It currently offers a chatbot called Le Chat, and a platform allowing users to make customized AI agents.
Can I buy shares of Mistral AI?
Mistral AI stock is not currently available to the public since the start-up was only founded in May 2023. An IPO that would allow individual investors to buy the stock is unlikely to happen soon.
