Microsoft AI Updates: October 29, 2026

1. Microsoft Opens the Copilot Harness to Developers in Foundry Agent Service

Microsoft made the Microsoft Copilot harness, the agent runtime GitHub built and Microsoft now uses across Copilot Code, Copilot Studio, the GitHub Copilot app, the CLI, and VS Code, available to customers through Microsoft Foundry. The harness is in public preview in Foundry Agent Service. Microsoft runs the agent loop and sandbox, and developers supply instructions, skills, tools, and model choice. Microsoft says it works across more than 20 frontier models plus bring-your-own-key, routes tasks to suitable models, and supports MCP, agent skills, and plugins. Its runtime was recently ported to Rust to reduce session overhead and time-to-first-token. The preview includes reusable skills packaged as SKILL.md, connected Foundry and MCP tools with configured authentication and approvals, file and code execution with built-in subagent delegation, and source-controlled agent definitions deployable via azd. A downloadable SDK is also available. Microsoft also announced general availability of long-running resilience for hosted agents. Source

2. Microsoft FY27 Q1 Results: Azure Revenue Up 48%, Commercial Backlog Reaches $677 Billion

Microsoft reported fiscal 2027 first-quarter revenue of $92.3 billion, up 19%, with GAAP net income of $36.6 billion, up 32%. The Agents and Infra segment brought in $76.8 billion, up 25%, and Azure revenue grew 48%. Microsoft Cloud revenue was $63.9 billion (up 30%), and commercial remaining performance obligation rose 73% to $677 billion. Microsoft 365 commercial cloud revenue grew 18% on an adjusted basis. Microsoft’s OpenAI investments added a net gain of $207 million to net income this quarter, compared with a $3.1 billion loss a year earlier, and the company excludes these from its non-GAAP figures. Devices and Consumer revenue fell 3% to $15.5 billion, and Windows OEM and Devices fell 22%. Microsoft also disclosed Azure revenue in dollars for the first time: $33.2 billion for the quarter (TechCrunch). Source

3. Microsoft Booked $10 Billion in Revenue From OpenAI Last Quarter

Microsoft recorded $10 billion in revenue from its commercial arrangements with OpenAI, including revenue sharing, in the quarter ended September 30. That is nearly 11% of Microsoft’s record $92.3 billion total, and follows $24.1 billion for all of fiscal 2026. Receivables from OpenAI rose to $7.2 billion from $6 billion in June, and Microsoft’s stake in OpenAI slipped to about 24% from about 25%. Source