LONDON — It’s been a busy week for the European technology sector.

On Tuesday, London-headquartered artificial intelligence startup ElevenLabs announced it would let employees sell shares in a secondary round that doubles its valuation to $6.6 billion.

Then, Dutch chip firm ASML on Wednesday confirmed it was leading French AI firm Mistral’s 1.7 billion-euro Series C funding round at a valuation of 11.7 billion euros ($13.7 billion) — up from 5.8 billion euros last year. Mistral is considered a competitor to the likes of OpenAI and Anthropic.

To cap it off, Swedish fintech firm Klarna on Thursday debuted on the New York Stock Exchange after a long-awaited initial public offering. Klarna shares ended the day at $45.82, giving it a market value of over $17 billion.

These developments have revived hopes that Europe is capable of developing a tech industry that can compete with the U.S. and Asia. For the past decade, investors have been talking up Europe’s potential to build valuable tech firms, rebuffing the idea that Silicon Valley is the only place to create innovative new ventures.

However, dreams of a “golden era” of European tech never quite came to fruition.

A key curveball came in the form of Russia’s 2022 invasion of Ukraine, which caused inflation to soar and global central banks to hike interest rates as a result. Higher rates are considered bad for capital-intensive tech firms, which often need to raise cash to grow.

Ironically, that same year, Klarna — which at one point was valued as much as $45.6 billion in a funding round led by SoftBank — had its market value slashed 85% to $6.7 billion.

Now, Europe’s venture capital investors view the recent buzz around the region’s tech firms as less of a renaissance and more of a “growing wave.”

“This started 25 years ago when we saw the first signs of a European tech ecosystem inspired by the original dotcom boom that was very much a Silicon Valley affair,” Suranga Chandratillake, partner at Balderton Capital, told CNBC.

Balderton has backed a number of notable European tech names including fintech firm Revolut and self-driving vehicle tech developer Wayve.

“There have been temporary setbacks: the 2008 financial crisis, the post-Covid tech slump, but the ecosystem has bounced back stronger each time,” Chandratillake said.

“Right now, the confluence of a huge new technological opportunity in the form of generative AI, as well as a community that has done it before and has access to the capital required, is, unsurprisingly, yielding a huge number of sector-defining companies,” he added.

For one, there’s a clear discount on European tech right now. Venture firm Atomico’s annual “State of European Tech” report last year pegged the value of the European tech ecosystem at $3 trillion and predicted it will reach $8 trillion by 2034. Compare that to the story in the U.S., where the tech sector’s biggest megacap stocks combined are worth over $20 trillion.

“Ten years ago, there wasn’t a single European startup valued at over $50 billion; today, there are several,” Jan Hammer, partner at Index Ventures, which has backed the likes of Revolut and Adyen, told CNBC.

“Tens of thousands of people now have firsthand experience building and scaling global companies from companies such as Revolut, Alan, Mistral and Adyen,” Hammer added. “Crucially, European startups are no longer simply expanding abroad — they are born global from day one.”

Amy Nauikoas, founder and CEO of fintech investor Anthemis, suggested that investors may be viewing Europe as something of a safe haven market amid heightened geopolitical risks and macroeconomic uncertainty.

“This is an investing opportunity for sure,” Nauikoas told CNBC. “Macroeconomic dislocation always favors early-stage entrepreneurial disruption and innovation.”

“This time around, trends in family office, capital shifts … and the general constipation of the U.S. institutional allocation market suggest that there should be a lot more money flowing from … global investors to U.K. [and] European private markets.”

Several tech entrepreneurs and investors have backed a new initiative called “EU Inc.” Launched last year, its aim is to boost the European Union’s tech sector via the formation of a “28th regime” — a proposed pan-European legal framework to simplify the complex regulations across various individual EU member states.

“Europe is in a bad headspace at the moment for quite obvious reasons, but I don’t think a lot of the founders who are there really are,” Bede Moore, chief commercial officer of early-stage investment firm Antler, told CNBC.

“At best, what you can say is that there’s this secondary tailwind, which is that people are feeling galvanized by the need for Europe to … be a bit more self-standing.”

WATCH: CNBC interviews Klarna CEO Sebastian Siemiatkowski

OpenAI on Thursday said its nonprofit parent will continue to have oversight over the company and will own an equity stake of more than $100 billion.

The artificial intelligence startup, recently valued at $500 billion, said this structure will make the nonprofit “one of the most well-resourced philanthropic organizations in the world,” and will allow the company to continue to raise capital.

OpenAI also announced it has signed a non-binding memorandum of understanding with Microsoft, which outlines the next phase of their partnership. Microsoft has invested over $13 billion in OpenAI, backing the company as early as 2019, three years before the launch of of the chatbot ChatGPT.

“We are actively working to finalize contractual terms in a definitive agreement,” OpenAI said in a joint statement with Microsoft, which is also the company’s key cloud partner. “Together, we remain focused on delivering the best AI tools for everyone, grounded in our shared commitment to safety.”

In May, OpenAI bowed to pressure from civic leaders and ex-employees, announcing that its nonprofit would retain control even as the company was restructuring into a public benefit corporation. OpenAI was founded as a nonprofit research lab in 2015, but has in recent years become one of the fastest-growing commercial entities on the planet.

OpenAI said Thursday it is working closely with the California and Delaware Attorneys General to establish its structure.

“OpenAI started as a nonprofit, remains one today, and will continue to be one – with the nonprofit holding the authority that guides our future,” the company’s Chairman Bret Taylor said in a statement Thursday.

The startup has been engulfed in a heated legal battle with Elon Musk, one of its co-founders. Musk has been trying to keep OpenAI from converting into a for-profit company as he competes in the generative AI market with his own startup, xAI.

OpenAI said its nonprofit is also opening applications for the first phase of a $50 million grant initiative that is aimed to support other nonprofit and community organizations across AI literacy, economic opportunity and community innovation.

WATCH: AI’s trillion-dollar money loop

Microsoft CEO Satya Nadella told employees in a meeting on Thursday that the company has work to do to smooth relations with employees after announcing several rounds of layoffs and a mandated partial return to in-person work.

In the meeting that was held online, an employee asked executives to speak about a perceived lack of empathy in the company’s culture as of late and steps Microsoft is taking to rebuild trust with its workforce.

“I deeply appreciate that, the question and the sentiment behind it,” Nadella said, in audio that was obtained by CNBC. “I take it as feedback for me and everyone in the leadership team, because at the end of the day, I think we can do better, and we will do better.”

Nadella’s comments come after Microsoft slashed 9,000 jobs in July, following smaller reductions in the months prior. On Tuesday, Microsoft said workers living near its headquarters in Redmond, Washington, must come into the office three days a week, starting in February, with a broader rollout to follow.

Amy Coleman, Microsoft’s human resources chief, said at Thursday’s meeting that reception to the return-to-office announcement has been mixed, with some workers feeling like they’re losing autonomy. But she said that employees in and around Seattle already come in, on average, 2.4 times each week.

Like most of the tech industry, Microsoft went fully remote during the pandemic, and made particular use of its internal Teams video and chat offerings, which gained rapid adoption during that period. Microsoft has been slower than many of its peers to put a mandate in place for coming back to the office. Amazon, one of Microsoft’s top rivals, called employees back to offices five days a week in January.

While Nadella and the executive team are taking criticism from some staffers, Wall Street is applauding the company’s growth and execution. The stock is up almost 20% this year, outperforming the broader market, pushing Microsoft’s market cap to $3.7 trillion, which trails only Nvidia among the world’s most-valuable companies.

In July, Microsoft reported a 24% increase in net income to $27 billion. The company’s gross margin was under 69%, compared with 71% in late 2023. It’s rapidly building and renting data center infrastructure to meet artificial intelligence demand.

Nadella said at the meeting that with remote work, new employees and those who are early in their careers don’t always feel a sense of apprenticeship or mentorship.

“Management is just mostly all remote, but the interns are all, you know, in one location,” he said. “And so those are things that just will break a social contract.”

Microsoft didn’t immediately provide a comment.

Even with Microsoft’s rapid expansion, Nadella said the company is feeling the pressure. It’s a common theme in the software industry, as concerns proliferate about the impact of AI and its potential to automate work.

“We have some very, very hard work ahead of us, and that hard process of renewal is essentially what we have to do,” Nadella said. “You have to be hardcore in terms of an intellectual honesty about what really needs to happen.”

Microsoft’s Azure cloud business grew 39% in the latest quarter, but revenue in the Windows and devices business increased by just 2.5%.

“Some of the biggest businesses we built may not be as relevant going forward,” Nadella said. “Some of the margin that we love today may not be there tomorrow, and that means you have to be way ahead of all of those going away, right?”

Microsoft, which celebrated its 50th anniversary in April, will retain its core values as it confronts market realities, Nadella said.

“Capital markets have one simple truth,” he said. “There is no permission for any company to exist forever.”

That wasn’t the only contentious topic at the meeting.

Employees are awaiting details from a third-party investigation after The Guardian said in August that Israel’s military used Microsoft’s Azure cloud infrastructure to store Palestinians’ phone calls as part of Israel’s invasion of Gaza. Microsoft has fired five employees following protests at its headquarters in Redmond, according to a statement from the group No Azure for Apartheid.

Microsoft President Brad Smith, whose office the protesters entered, addressed the issue on Thursday. He said that he and Coleman met with Jewish Microsoft employees, who have been harassed and threatened and have seen their public information shared online.

“We don’t get to control what happens outside Microsoft, but we need to be clear about one thing,” Smith said. “There is no room for antisemitism at Microsoft, and as a company and as a community, we will protect this group and defend them from that.”

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