Microsoft has expanded its partnerships with Databricks and French AI company Mistral, covering Azure usage, custom processors, European computing capacity, and AI model distribution.
Databricks said its expanded Microsoft partnership will continue into the 2030s. The data and AI software company will increase its use of Azure for its internal business operations and analytics, while also moving more workloads onto Microsoft-designed processors.
Databricks will use Azure Databricks to run its core business operations and analytics and to build its unified lakehouse.
“With Databricks Genie and Unity AI Gateway deeply integrated across Microsoft’s products, we’re helping enterprises unify their data and ground AI in business knowledge,” Databricks co-founder and CEO Ali Ghodsi said.
The agreement includes greater use of Azure Cobalt, Microsoft’s Arm-based server processors. Databricks plans to use the chips for data-intensive operations and agentic AI workloads.
Databricks currently uses Microsoft’s Cobalt 100 processors and plans to adopt Cobalt 200. Microsoft said Cobalt 200 delivers up to 50% better generational performance than Cobalt 100, depending on the workload, and includes memory encryption enabled by default.
Microsoft said it designed Cobalt 200 for scale-out workloads including data pipelines, cloud databases, and agentic AI applications. The processor also uses Azure Boost to offload networking and remote-storage functions.
Microsoft will also continue integrating Databricks technology across its software portfolio. This includes Genie, a conversational analytics tool that allows users to query business data using natural-language instructions.
The companies will also expand integrations involving Unity AI Gateway. Databricks describes the service as a central governance and operational-control layer for AI models, agents, tools, and external AI services.
Its functions include access policies, rate limits, budget controls, usage tracking, audit logs, model routing, and monitoring of prompts and tool activity.
The integrations will extend across Microsoft services including Entra, OneLake, Power BI, Purview, Foundry, Teams, and Copilot. Databricks said Genie and Unity AI Gateway will be embedded more deeply into customer workflows across the Microsoft product stack.
Databricks provides software for ingesting, managing, and analysing data, as well as developing AI applications. The company said its platform is used by more than 20,000 organisations, including 70% of Fortune 500 companies.
Databricks also said it had agreed to a funding round valuing the company at $188 billion. The round is expected to close later this summer.
Mistral adds European infrastructure options
The expanded agreement follows a separate multibillion-dollar infrastructure deal between Microsoft and Mistral. Microsoft has agreed to spend billions of dollars on Mistral’s computing infrastructure in Europe, although the companies did not disclose the total value or payment schedule.
Under the agreement, Azure customers will be able to develop software using Mistral’s data centres in France. The French capacity will be operated by Mistral and made available to Azure customers through the partnership.
The agreement gives European and regulated organisations another option for running AI workloads on infrastructure operated in France while continuing to use Microsoft software and security services.
The partnership covers deployments through Azure, Azure Local, and Mistral-operated European infrastructure, with model availability varying by product and environment.
Azure Local supports cloud-connected and fully disconnected environments, allowing selected Azure services and management tools to run outside Microsoft’s public cloud regions. Microsoft said the deployment options are intended for organisations with requirements involving data location, operational control, latency, resilience, and business continuity.
“By putting Mistral’s models on Azure Local and on Mistral’s computational capacity, we can combine American and European technology and do it in a way that provides continuous and assured access,” Microsoft President Brad Smith said.
Mistral is targeting one gigawatt of computing capacity by 2030. The companies have not disclosed how much of the target will be covered by Microsoft’s spending commitment.
Microsoft said Mistral plans to add capacity based on thousands of Nvidia Vera Rubin graphics processing units for model training, inference, and large-scale deployments.
Mistral’s data-centre expansion will use Nvidia hardware, while Databricks plans to increase its use of Microsoft’s Cobalt processors. Nvidia and Microsoft are existing investors in Mistral.
The partnership also expands the distribution of Mistral’s models through Microsoft products. Mistral Medium 3.5 and OCR 4 have been added to Microsoft Foundry, while Medium 3.5 is available through Copilot Studio.
Microsoft Foundry provides tools for developing and managing AI applications. Copilot Studio allows organisations to create and configure AI assistants that connect with business systems and data.
Azure Local customers will also have the option to run Mistral models made available under open or open-weight licensing terms. The rights to modify or develop each model will depend on its specific licence.
Microsoft President Brad Smith said the agreement does not include a new equity investment in Mistral. Microsoft and Nvidia had invested in the French company before the latest infrastructure agreement.
Mistral CEO Arthur Mensch said the companies are developing a joint go-to-market plan. He said the agreement showed Microsoft and Mistral were “working together on closing the gap on the infrastructure side in Europe.”
Mistral has targeted customers in manufacturing, financial services, defence, and the public sector. The company has also secured work with France’s armed forces.
(Photo by Praswin Prakashan)
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