Microsoft (MSFT) stock was down 2.73% on Wednesday as the company announced a major partnership extension with Databricks, locking in collaboration through the 2030s.
Under the deal, Databricks will run its own core business operations and analytics on Azure Databricks. It will also increase its use of Azure Cobalt, Microsoft’s custom Arm-based chip platform.
Databricks currently uses Azure Cobalt 100. The company plans to move to Cobalt 200, which Microsoft says offers up to 50% better performance and includes memory encryption enabled by default.
That’s a meaningful hardware commitment, and it signals real confidence in Microsoft’s infrastructure roadmap.
Microsoft will deepen integrations of the Databricks platform across its product stack. That includes Microsoft 365, Teams, Copilot, Power BI, Microsoft Purview, and Microsoft Foundry.
Databricks’ Genie AI tool and Unity AI Gateway will be integrated directly into Microsoft customer workflows. Genie is a conversational analytics tool that lets users query data using plain language.
“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,” said Ali Ghodsi, co-founder and CEO of Databricks.
Judson Althoff, CEO of Microsoft Commercial Business, said Databricks’ decision to run its own operations on Azure Databricks “gives customers confidence in a platform proven at enterprise scale.”
Thousands of joint customers already use Azure Databricks. Named customers include Banco Bradesco, Electrolux, SMBC, and Unilever.
Databricks’ platform is used by more than 20,000 organizations globally, including 70% of Fortune 500 companies.
Last week, Databricks signed off on a funding round that values the company at $188 billion. That round is expected to close later this summer.
The San Francisco-based firm remains one of the most valuable private companies in the world.
Althoff said the partnership will help customers get “greater performance, efficiency, and scale for their most demanding workloads” through Azure Cobalt-powered infrastructure.
MSFT was trading down 2.73% at the time of the announcement.
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