More than 50% of enterprise software could switch to AI, Mistral CEO says

NEW DELHI — More than 50% of enterprises’ current software could be replaced by AI, the CEO of Mistral AI told CNBC on Wednesday, potentially adding to investor concerns over software stocks.

The comments by Arthur Mensch, CEO of Mistral AI, come after a sell-off in major software names that was sparked in part by Anthropic’s Cowork product as investors grow increasingly worried that AI can do more of what current enterprise software does.

Investors fear AI could eat into so-called software as a service, or SaaS, business models. The iShares Expanded Tech-Software Sector ETF, which counts names such as Microsoft and Salesforce among its top holdings, is down more than 20% this year. In India, major software stocks like Tata Consultancy Services and Infosys have also fallen.

“I would say more than half of what’s currently being bought by IT in terms of SaaS is going to shift to AI,” Mensch told CNBC at the India Accelerates event on the sidelines of the AI Impact Summit in New Delhi, India.

“AI is making us able to develop software at the speed of light,” Mensch added.

The Mistral CEO said as long as enterprises have the “right infrastructure in place” they’re able to connect their data to AI systems to create applications to run certain parts of work.

“Then we do see with our customers … in a couple of days, we can create fully custom applications to run a workflow, to run a procurement workflow, or to run supply chain workflows, for instance, in a way where I would say five years ago, you would actually need a vertical SaaS.”

Mensch said there is a “replatforming” taking place where businesses are looking to use more AI instead of current SaaS.

“The replatforming is a big opportunity for us, because we now have more than 100 enterprise customers coming to us also with that will of maybe changing and replatforming their IT system, so maybe getting rid of certain things that they bought 20 years ago, and that is starting to be a bit expensive,” Mensch said.

“They see AI as a way to replatform the thing so that it becomes more efficient and less costly.”

Mensch said software focused on systems of records “are not going to change,” however. This type of software is responsible for data within an organization and often works in tandem with AI.

Bipul Sinha, CEO of Rubrik, has similar views to Mensch. In an interview on Wednesday with CNBC, Sinha said “workflow software” could be “significantly disrupted by AI.” However, system of record or data infrastructure software that is enabling AI, “will be a positive.”

Mensch also told CNBC that the company plans to open its first office in India this year as it expands into a market that global tech giants are all trying to get a slice of.

Mistral is currently working with international companies that have a footprint in India but is now “prospecting” potential customers based in the country in both the public and private sectors.

While Mistral is building data centers in Europe, the approach will be different in India, with the company planning to partner with companies that already have a physical infrastructure footprint in the country, Mensch said.

The Indian government is pushing AI firms to create models that can run locally with data stored domestically. India also has various languages such as Hindi and Punjabi which Mistral said its large language models are able to accommodate.

“That’s something that down the line will be super important for the Indian consumer market,” Mensch said.