How to Invest in Mistral AI in 2024

Mistral AI might not be a household name just yet, but the AI start-up is among the most promising out there, especially after it just scored 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 6.18%) and C3.ai (AI 3.02%), have soared this year, 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 new 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 (NASDAQ: GOOG, NASDAQ: GOOGL) DeepMind; Chief Technology Officer Timothee Lacroix, an ex-software engineer at Meta's (META 0.43%) 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 investors have in the founders and how much potential they see in AI.

The company aims to compete with OpenAI, developing large language models 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 is a brand-new company with no product and barely any employees. The company's website only says, "We're assembling a world-class team to develop the best generative AI models," and asks potential researchers, software engineers, and product developers to submit their resumes if they're interested in working there.

Keep reading to learn more about Mistral AI, how you can potentially invest in it, and when it might go public.

Is Mistral AI publicly traded?

Is Mistral AI publicly traded?

Mistral AI is not currently a publicly traded company.

It was only founded in May 2023, and is still a development-stage company without a product. It is focused on hiring employees right now.

The company held a highly successful seed funding round, which has set high expectations for the company and given it a large war chest to use to fund research and build out new generative AI tools.

The seed investing round was led by Lightspeed Venture Partners, a venture capital fund that has invested in more than 400 start-ups in its history, with at least a third of those going public or being acquired. Other high-profile investors participated in the round, including former Google CEO Eric Schmidt, French investment bank Bpifrance, Redpoint, Index Venture, and several other venture firms from around Europe.

When will Mistral AI have an 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, and it's much 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.

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 the 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 3.43%), which was officially founded in July 1994, opened for business in July 1995, and went public in May 1997.

Mistral's raising a nine-figure seed round just weeks 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 it since it does not even have a product or a business. 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 1.82%) invested roughly $10 billion in the company earlier this year.

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 the way Microsoft has become a major investor in OpenAI or how Amazon acquired a significant stake in Rivian (RIVN 6.1%) prior to the electric vehicle maker's IPO.

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.

Is Mistral AI profitable?

Is Mistral AI profitable?

Mistral AI doesn't have any product or any sales at the moment, so the company is not profitable.

Privately held companies don't report financial results, but since Mistral AI was only founded months ago, the company is likely not yet spending very much money.

It's still in the process of hiring people to begin developing its technology.

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 more than $100 million in cash, cash burn should not be a concern for the company and is unlikely to be meaningful in the near to medium-term future.

Should I invest in Mistral AI?

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 investors can only judge Mistral AI by the reputation of its three founders.

Investors who are interested in the company should pay attention to its first product release, which could still be years away.

Once the company has a product on the market, investors will be able to see how users respond to it and how it compares with other generative AI applications, such as OpenAI's ChatGPT.

That chatbot, for example, caught fire after its release as it racked up 100 million users in just two months, showing the product had clearly found an audience.

ETFs with exposure to Mistral AI

ETFs with exposure to Mistral AI

Since Mistral AI is not publicly traded, there aren't any ETFs that 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, the ROBO Global Robotics and Automation ETF, and the iShares Robotics and Artificial Intelligence ETF.

Those AI ETFs offer exposure to a wide range of AI stocks in areas like autonomous vehicles, robotics, and generative AI.

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, and Alphabet and Meta 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.

However, it's too early to determine Mistral's chances of success.

Without a product to assess, the company just represents potential at this point, and that does not count for much, especially in a rapidly evolving industry like artificial intelligence.

Mistral could become a major player, and the deep pockets backing the company will certainly help. At this point, however, the company is an unproven flyer, up against big tech companies that have rediscovered an interest in AI after ChatGPT became a smash hit.

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