Databricks has expanded its long-standing strategic partnership with Microsoft, extending the collaboration into the 2030s as both companies strengthen their focus on enterprise artificial intelligence. As part of the renewed agreement, Databricks will increase its use of Microsoft Azure and adopt Azure Cobalt processors to power data-intensive and agentic AI workloads, underscoring growing enterprise demand for scalable AI infrastructure.
The expanded partnership builds on more than a decade of collaboration between the two companies and is expected to deepen the integration of Databricks' AI and data capabilities across Microsoft's cloud ecosystem. Databricks said it will use Azure to run more of its core business operations and analytics while relying on Azure Databricks as the foundation of its unified data lakehouse architecture.
A key component of the agreement is Databricks' adoption of Microsoft's Azure Cobalt processors. The company plans to use the Arm-based custom chips for compute-intensive AI workloads, including agentic AI applications and large-scale data processing. Microsoft positions Azure Cobalt as a high-performance, energy-efficient infrastructure designed for cloud-native AI workloads, offering enterprises improved performance and operational efficiency.
The partnership also expands Microsoft's use of Databricks' AI technologies across its enterprise software portfolio. This includes deeper integration of Databricks Genie, the company's conversational analytics platform, enabling users to interact with enterprise data using natural language. The move reflects a broader industry shift toward embedding AI assistants directly into workplace productivity tools and business intelligence platforms.
Judson Althoff, Executive Vice President and Chief Commercial Officer at Microsoft, said the expanded collaboration will help customers benefit from greater performance, efficiency and scalability for demanding AI workloads through Azure Databricks and Azure Cobalt-powered infrastructure.
For Databricks, the announcement comes shortly after the company approved a new funding round that values it at approximately $188 billion, reinforcing its position among the world's most valuable privately held technology companies. The company said its platform is used by more than 20,000 organizations globally, including around 70% of Fortune 500 companies, to build AI applications and analyze enterprise data.
The renewed alliance reflects increasing competition among cloud providers and enterprise AI platforms as organizations seek integrated environments for developing, deploying and governing AI applications. Rather than focusing solely on large language models, enterprises are increasingly prioritizing data platforms that can securely combine proprietary data with AI models to support analytics, automation and decision-making.
The announcement also highlights Microsoft's continued investment in custom silicon as cloud providers seek to optimize AI infrastructure. Alongside graphics processing units from partners such as Nvidia, cloud companies are increasingly developing proprietary processors to improve performance, reduce costs and support growing AI demand. Azure Cobalt is Microsoft's latest effort in this direction, targeting enterprise AI and cloud-native workloads.
For enterprise customers, the expanded partnership is expected to provide tighter integration between Azure cloud services, Databricks' data intelligence platform and Microsoft's AI ecosystem. The companies said the collaboration aims to simplify AI adoption by enabling organizations to manage data, analytics and AI development within a unified cloud environment.
As businesses continue to accelerate investments in generative and agentic AI, strategic partnerships between cloud providers and AI platform vendors are becoming increasingly central to enterprise technology strategies. The Databricks-Microsoft agreement signals a continued focus on building AI infrastructure capable of supporting large-scale enterprise deployments over the coming decade.
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