• Apple has held internal discussions about acquiring AI startups Mistral and Perplexity, though no formal offers have been made.
  • The talks reflect Apple's strategic urgency to rapidly close the gap in AI capabilities with rivals like Google and Microsoft.
  • Industry consensus and market analysts view a strategic partnership as a more likely near-term outcome than an outright acquisition.

Apple Inc. has internally debated the potential acquisition of European AI lab Mistral and search startup Perplexity, according to people familiar with the matter, as the tech giant scrambles to bolster its artificial intelligence offerings. While no formal offers have been presented to either company, the high-level discussions underscore the intense pressure on Apple to demonstrate a competitive AI strategy after being perceived as lagging behind its peers.

The focus on Paris-based Mistral, valued at an estimated $14 billion, signals Apple's interest in securing high-performance foundation models. Founded by alumni from Meta's Llama project, Mistral has built a reputation for its efficient, open-source work. Acquiring the firm would instantly provide Apple with a top-tier AI research team and core technology, a move that could help stem its recent challenges with retaining top AI talent. However, such a cross-border deal would likely face scrutiny from European regulators keen on fostering domestic AI champions.

Conversely, a play for Perplexity would be a direct assault on the search market dominated by Google. The AI search startup has been highlighted by analysts as a "no-brainer" acquisition that would provide Apple with immediate product-market fit in conversational AI and a dramatically improved search experience, potentially supercharging its Siri assistant. People close to the situation caution that Perplexity's climbing valuation and its need to navigate a landscape of slowing growth could make it a more pressing acquisition target.

For now, the prevailing sentiment within the industry is that partnership agreements are a more probable next step than full-scale acquisitions. A deal of this magnitude—potentially eclipsing Apple's $3 billion acquisition of Beats a decade ago—would represent a significant shift in corporate strategy. Apple did not immediately respond to a request for comment on the discussions.

The internal talks come at a critical juncture. Investors have grown increasingly impatient for Apple to articulate a clear and aggressive AI road map. With rivals Microsoft and Google making bold moves through partnerships and investments, Apple's window to catch up is narrowing. Whether through acquisition or partnership, the market expects Apple to make a decisive move soon to integrate advanced AI into its core consumer products.