The US and Asia have been grabbing most of the headlines in the world of artificial intelligence (AI) recently, from Elon Musk’s offer for generative AI (Gen AI) behemoth OpenAI to the surprise emergence of low-cost Chinese rival Deepseek.

However, away from the spotlight, European AI players are quietly consolidating and building capital as the sector builds scale to stay close to centre stage.

M&A transaction value in European AI reached a record EUR 8.4bn from 176 deals in 2024, according to Mergermarket data. This is more than three times the previous record of EUR 2.5bn booked in 2023, the data shows.

The standout transaction came in April when US buyout fund Thoma Bravo reached a take-private deal worth GBP 4.2bn (EUR 4.9bn) for UK-based cybersecurity and AI specialist Darktrace.

Activity is off to a strong start in 2025. One noteworthy deal earlier this month involved Luminance, a pioneer in Legal-Grade AI, which announced a Series C fundraising for USD 75m.

France to the forefront

The rise of Deepseek, which has reportedly built its platform on a shoestring USD 6m budget, shook the AI community, sending US tech stocks plummeting and announcing China’s arrival on the global stage.

If Europe is to have its own Deepseek moment, a French company would be a good bet. At this month’s AI Action Summit in Paris, President Emmanuel Macron announced a plan worth EUR 109bn to make the country a global AI hub helped by state funding for projects in the country.

Although Europe is late for foundational tech, the race for GenAI-based industrial applications in areas like defence, healthcare, energy and culture & media is still wide open.

France is already home to a number of Europe’s AI champions. Paris-based Mistral AI, for example, is reportedly preparing for a potential initial public offering (IPO) after raising EUR 600m in fresh capital in June 2024.

Also, AI software developer poolside and Holistic AI (H) – both also headquartered in Paris – raised USD 500m and USD 220m respectively in bumper funding rounds last year.

Consolidation comes

The wave of investment into European AI shows no sign of slowing with a slew of assets expected to come to market this year.

In Germany, for example, Bregal and Maguar Capital are preparing to launch a sale process for legal tech firm STP Group; while Waterland is also readying digital transformation specialist Skaylink for a process in 2H25.

Ardian-owned French AI and data consultancy group Artefact, meanwhile, has been receiving in-bound approaches with Permira and EQT among those interested in the business, which has EUR 40m in EBITDA.

While OpenAI and Deepseek are likely to remain the leading characters in AI, European players have a good chance of playing a major supporting role in the years to come.