Databricks and Microsoft have announced an expansion of their decade-long strategic partnership, extending it into the 2030s, as both companies push to help enterprises ground AI in their own business context.
Under the expanded deal, Databricks will deepen its use of Azure Databricks to run its own core business operations and build its unified lakehouse, while adopting Azure Cobalt, Microsoft’s next-generation Arm-based infrastructure, to improve performance and efficiency. Microsoft will continue integrating the Databricks Data and AI platform across its products, bringing capabilities such as Genie, Databricks’ AI co-worker, directly into customer workflows.
Closing the gap between AI and business context
Enterprises want AI that understands their customers, products, operations, metrics and business processes while running securely where the work happens. Yet most organisations still struggle to connect AI to trusted business knowledge, govern models and agents consistently, and control costs — a gap the two companies say the expanded partnership is designed to close.
“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. This lets customers get the full benefits of agents and models while controlling costs and ensuring governance,” said Ali Ghodsi, Co-founder and CEO of Databricks.
Judson Althoff, CEO of Microsoft Commercial Business, said the next generation of AI will be defined by how effectively organisations turn their unique knowledge into intelligence, and that Databricks’ decision to run its own core business operations on Azure Databricks gives customers confidence in a platform proven at enterprise scale.
Deeper Azure Cobalt use and Microsoft stack integration
Databricks currently uses Azure Cobalt 100 and plans to adopt Cobalt 200, which Microsoft says delivers up to 50 per cent better performance for agentic and data-intensive workloads and includes memory encryption enabled by default. Deep integrations will span Microsoft Entra, Azure Data Lake Storage, Azure security, Microsoft OneLake, Power BI, Microsoft Purview, Microsoft Foundry, Power Platform, Microsoft 365, Teams and Copilot, governing models, agents and cost through Databricks’ Unity AI Gateway.
Thousands of joint customers, including Banco Bradesco, Electrolux and Unilever, already run critical workloads on Azure Databricks, with the companies pointing to improved performance, security, AI governance and enterprise readiness as the collaboration deepens.
