Databricks and Microsoft deepen Azure partnership for enterprise AI

Microsoft and Databricks have expanded their strategic partnership into the 2030s, with Databricks increasing its reliance on Azure Databricks for core business operations, analytics and its unified lakehouse. The companies said the deeper collaboration is aimed at helping enterprises connect AI systems to trusted business data while maintaining governance, cost control and operational reliability.

Databricks will also broaden its use of Azure Cobalt, Microsoft’s Arm-based infrastructure, for agentic and data-intensive workloads. Databricks currently uses Cobalt 100 and plans to adopt Cobalt 200, which Microsoft says delivers up to 50% better performance and includes memory encryption enabled by default.

Microsoft plans to continue integrating the Databricks Data and AI platform across services including Microsoft Entra, Azure Data Lake Storage, Microsoft OneLake, Power BI, Microsoft Purview, Microsoft Foundry, Power Platform, Microsoft 365, Teams and Copilot. The integrations include Databricks Genie, Genie Ontology and Unity AI Gateway, designed to ground agents in enterprise data and govern models, agents and costs inside customer workflows.