ASML’s €1.3B Investment in Mistral AI called ‘Gross Misallocation of Capital’

ASML’s €1.3 billion ($1.5 billion) recent investment in Mistral AI has faced criticism from investors who labeled the move a ‘gross misallocation of capital.’ Critics opposed the move stating ASML should prioritise shareholder returns over Europe’s strategic push into Artificial Intelligence (AI).

In their criticism, they pointed out the irrationality of funding a high-risk AI startup, saying it falls outside ASML’s core business and could expose the company to unnecessary financial risk.

This is a gross misallocation of capital. $ASML has no business “boosting European tech sovereignty.” Leave that to EU bureaucrats. If this cash is burning a whole in ASML’s coffers, return it to shareholders instead.

Analysts note that venture investments are inherently risky. Mistral AI’s valuation jumped from €5–6 billion in its 2024 Series B to €10 billion pre-money in this round. Despite the surge, the startup still relies on the U.S. infrastructure like Microsoft Azure for hosting, raising questions about the “European sovereignty” perspective. Critics also question whether ASML’s board, now seeking a seat at Mistral, is capable of overseeing an AI startup, potentially exposing shareholders to volatility in a sector where most startups fail to deliver outsized returns.

ASML’s Funding and Its Potential to Strengthen Mistral AI in the Global Market

Mistral AI, a French-based start-up, designs open-weight and generative AI models for applications like natural language processing and advanced machine learning.

The investment by ASML will provide Mistral AI with the resources to advance research and expand its engineering team and its models to meet growing global demand. It will also help the startup compete more effectively with established AI firms in the U.S. and China. Moreover, the deal brings Mistral AI under European control, which helps counter U.S. dominance.

While the investment carries risks, it marks a turning point for Europe’s AI ambitions. By backing Mistral AI, ASML is not only betting on a promising startup but also signaling that European companies are willing to take bold moves to compete globally. The move could set a precedent for future private investments in the region, shaping the continent’s role in the rapidly evolving AI landscape.