Microsoft is turning to an old friend and a familiar advantage in search of a new edge in AI.

The company and its longtime partner Nvidia on Wednesday started taking orders for a new line of high-end Windows PCs built to run large AI models independent of the cloud.

Microsoft also announced what it calls “Windows Hybrid Intelligence,” a set of features that will let its Copilot assistant read the files on a PC, take actions on the machine and opt to run AI models locally instead of in the cloud when it makes sense.

It’s not a new concept to users of such programs as Anthropic’s Claude, Perplexity and OpenClaw, which already work with the files on a user’s computer. But only Microsoft can build the features into Windows itself, along with security controls that limit what an AI agent can reach on the machine and will keep a separate record of what the agent does.

“I think agents are going to be the largest users of the file system,” Microsoft CEO Satya Nadella said during an on-stage conversation with Nvidia CEO Jensen Huang at an event in San Francisco.

Microsoft got an early jump in AI with its 2019 investment in OpenAI and the 2021 debut of GitHub Copilot, its AI coding assistant. But its Copilot products for consumers and businesses have since been overshadowed by OpenAI’s ChatGPT and Anthropic’s Claude.

Both rivals also moved quickly on AI agents that write code and carry out other tasks on a user’s computer, the kind of software Microsoft is now building into Windows. Microsoft’s own Copilot Cowork, which it introduced in March, integrates Anthropic’s Claude.

The tech giant has been reworking Copilot to catch up. Earlier this year, it put its Copilot teams for consumers and businesses under Jacob Andreou, now its executive vice president of Copilot. Last month, it released a new version of the app with tools for coding and long-running tasks.

Where Copilot is headed: Windows Hybrid Intelligence gives Copilot three new capabilities, as Andreou described them on stage. The assistant can draw on all the files on a PC, take actions such as moving files and changing settings, and hand tasks to AI models running on the machine “when cost or privacy matter more.”

Copilot will still use the cloud for the hardest tasks, Andreou said, and will act on the PC only with the user’s permission.

Microsoft said the features are expected to begin rolling out in the coming months on Copilot+ PCs, the AI-focused Windows machines it introduced in 2024.

Developers will get a version first. An experimental release coming later this month will let GitHub Copilot automatically send simpler coding tasks to an AI model on the PC and harder ones to the cloud.

In one example depicted on stage, Copilot’s Autopilot agent found an email from Andreou’s accountant, gathered tax documents scattered across his PC, renamed and sorted them into folders, bundled them into a zip file and drafted a reply with it attached, pausing for his approval before sending. The sorting was handled by AI models on the laptop, he said, so the tax details weren’t sent to the cloud.

Running AI models on the PC reduces the usage charges that come with AI in the cloud. Nadella wrote on X that Microsoft is bringing “unmetered intelligence to every desk and every home,” echoing the company’s original mission of “a computer on every desk and in every home.” A slide in the presentation said local models would run tasks on the PC “at no extra cost.”

Microsoft is also adding thousands of quick actions to the search box on the Windows 11 taskbar, such as switching to dark mode, arranging windows or sending a text message. Those start rolling out Wednesday to people in the Windows Insider testing program.

An option to get Copilot answers in the search box will be opt-in and will arrive in select markets later this year, according to the company.

The Recall precedent: Microsoft has run into trouble before with AI that looks at what’s on a PC. Recall, a feature that takes periodic screenshots of a user’s activity to make it searchable, drew objections from security researchers when it was announced in 2024. Microsoft delayed it and made it opt-in before releasing it widely in 2025.

Recall didn’t come up at Wednesday’s event. Microsoft’s blog post says Copilot’s access to local content, which it describes as “files and recent activity,” will require the user’s permission.

Limits on AI agents: Pavan Davuluri, Microsoft’s executive vice president of Windows and Devices, said the AI agents that run on PCs today are “fundamentally insecure because they have broad system access.”

Microsoft’s answer is a technology called Microsoft Execution Containers, now generally available in Windows 11, which lets an organization set which files and networks an AI agent can reach. Microsoft said OpenAI’s Codex and OpenClaw already support it, and that Anthropic’s Claude Code and Perplexity plan to.

Meta’s Muse agent is coming to Windows as an app that uses the technology, as well.

The new PCs: The machines are built around Nvidia’s RTX Spark chip and aimed at developers and creative professionals who want to run large AI models on their own computers.

Microsoft’s Surface Laptop Ultra, a 15-inch laptop with up to 128GB of memory, starts at $2,599 and will be available Oct. 16, the same day similar laptops from Asus, Dell, HP, Lenovo and MSI begin shipping.

A desktop version for developers, the Surface RTX Spark Dev Box, costs $5,999 and ships in the U.S. in November.

Microsoft is pitching the laptops against Apple. It says machines with the Nvidia chip start producing AI responses up to 2.1 times faster than a 16-inch MacBook Pro with Apple’s M5 Pro chip and generate AI images up to 4.3 times faster, citing tests it commissioned or that Nvidia ran on preproduction machines.

The company is also offering up to $1,000 back to buyers who trade in a MacBook Pro.

Huang said the chip took more than 4,000 engineering years and started with a conversation he had with Nadella four years ago.

Nvidia’s Windows roots: Sriram Krishnan, the venture capitalist and former White House AI advisor who moderated the conversation, asked Huang for a favorite memory of working with Microsoft. Huang said Nvidia owes its existence to Windows.

He recalled a moment in late 1992, when Windows 3.1 was new and he and his co-founders, who had worked mostly on workstations, started imagining a PC with 3D graphics that could run games and design software. They started the company the next year.

“If not for Windows, Nvidia wouldn’t have been founded,” Huang said.

He traced a line from there to the AI boom. Windows brought graphics chips to the PC, he said, which led to Nvidia’s GeForce chips and its CUDA software, which gave AI researchers the computers they needed for deep learning.

Nadella joked that Huang was “now going to do a little transfer of market cap back to me.” Nvidia is the world’s most valuable company, at about $5.8 trillion. Microsoft is worth about $3.9 trillion.

“Windows has been with me for 34 years,” Huang said at the end of the conversation. “Looks like it’s going to be with me for 34 more.”

“There you go,” Nadella added before they walked off the stage.

Microsoft on Friday morning unveiled its long-promised Copilot “super app” — without officially calling it that — combining AI chat, coding and long-running agents into a unified app for business and personal use.

The new version of the Copilot app adds sections called Home, which combines chat with Microsoft’s Cowork agent; Code, which lets people build their own apps and tools by describing them; and Autopilot, where people can set up their own always-on AI agents.

It also brings full versions of Word, Excel and PowerPoint inside Copilot, so people can create and edit documents with AI and their co-workers without switching apps.

The announcement is Microsoft’s answer to OpenAI and Anthropic, which have been combining chat, coding and agents in their own apps and selling them directly to businesses that have long been Microsoft’s core customers. Microsoft also uses models from both companies in Copilot, alongside its own.

Partners and rivals: Microsoft executives contrasted the company’s approach with OpenAI and Anthropic during an event Wednesday, according to a transcript provided by Microsoft. The pitch is aimed at corporate IT departments, which have long relied on Microsoft for security and compliance.

Jacob Andreou, the executive vice president who leads Copilot, said Microsoft knew that “unlike a lot of our competition, sending your most sensitive files down to a local machine into a VM was a complete nonstarter” — an apparent reference to Anthropic’s Claude Cowork, which runs in a virtual machine on the user’s computer.

Microsoft CEO Satya Nadella pitched Copilot as a hedge against relying on any one AI lab, saying companies should be able to test models against their own benchmarks and swap one out for another.

“My test of true independence going forward is for you to have a private eval that you can hill climb on and substitute a model,” he said. Translation: a “private eval” is a company’s own set of tests for AI models, and “hill climb” is a phrase in vogue in AI circles for steadily improving results against those tests.

A company that can’t do those things, he added, has effectively handed the knowledge it builds with AI “to somebody else.”

Model choice: Microsoft also emphasized the ability to switch between AI models from different companies. A menu shown during the presentation let users pick OpenAI’s GPT or Anthropic’s Opus, or an Auto mode that chooses a model for each request.

Microsoft also showed its own MAI models alongside OpenAI, Anthropic and xAI on one of Nadella’s slides, although they weren’t listed in the menu shown during the demo.

The rollout: Nadella first promised the super app at Microsoft’s Build developer conference in June, saying that “come summer” the company would bring “coding to all knowledge work within one Copilot super app.” On Microsoft’s July 29 earnings call, he told investors it would arrive “this quarter,” which ends Sept. 30.

Friday’s announcement meets that deadline with less than a week to spare, and most of the new features won’t be widely available until later.

• Code, already in the hands of a few customers in Microsoft’s Frontier early-access program, rolls out more widely to the program at the end of the month, with broad availability in the coming weeks and a preview for Microsoft 365 Premium and Pro subscribers later this year.
• Autopilot expands to private preview at the end of the month. Office in Copilot will roll out to consumers and Frontier customers in the coming weeks.

Office inside Copilot: Copilot has long run inside Word, Excel and PowerPoint. Now the full apps also run inside Copilot. “This is not just some simplified viewer,” Andreou said.

In a demo, a Microsoft product manager had Copilot pull data into an Excel workbook, accepted her team’s tracked changes in a Word document, and then had Copilot turn both into a PowerPoint deck without leaving the app. Co-workers can edit the same files at the same time from the regular Office apps, according to Microsoft.

How it’s priced: Copilot now has two ways to pay. A per-user monthly license covers everyday uses such as chat and Copilot features in Word, Excel, PowerPoint, Outlook and Teams. More intensive agent work, including Cowork, Code and Autopilot, is billed based on usage, as are the newest frontier models, OpenAI’s Astra and Anthropic’s Claude Fable.

“Our view is that there are two kinds of AI at work,” said Jared Spataro, Microsoft’s chief marketing officer for AI at Work, in a recorded briefing for media. “They call for two very different ways of paying, and Copilot offers both.”

Consumer Microsoft 365 subscriptions will also add usage-based billing later this year for Cowork, Code and other new features, Spataro said.

Nadella told investors in July that Microsoft is evolving its business model “beyond per-seat to per-seat-plus-consumption.” Usage-based services are off by default, and administrators can set spending limits for an entire company, specific groups or individual users through Microsoft’s Agent 365 management tools.

From OpenClaw to Autopilot: Autopilot grew out of Microsoft’s experiments with OpenClaw, the open-source personal AI agent that went viral earlier this year. In March, Nadella described OpenClaw as a security risk akin to “a virus.”

By June, Microsoft had introduced Scout, an always-on personal agent for work that it called the first of its Autopilots. Nadella told investors in July that the agent was “powered by OpenClaw.” The new Copilot drops the Scout name, and people instead create and name their own Autopilots.

In his presentation this week, Andreou pitched Autopilot as the answer to the concerns that have kept agents like OpenClaw out of big companies.

“The hallmark of an amazing, long-running agent is autonomy and flexibility,” he said. “That is the same thing that makes them absolutely terrifying to an IT admin.”

Each Autopilot runs in the cloud inside a company’s Microsoft 365 environment, with its own identity, memory and email address, and people can tag it in Teams or Outlook like a co-worker.

In a demo, a Microsoft employee playing the role of a regional manager at a retail chain gave his Autopilot, named Dot, one goal: make sure stores had inventory in time for Black Friday. It chose which Teams channels, email threads and inventory data to monitor, sent him a daily summary, and flagged a shipment problem that could affect 18 stores.

The adoption question: Microsoft reported more than 30 million paid Microsoft 365 Copilot seats in July, up from 20 million in April. That’s still only about 7% of the more than 450 million commercial Microsoft 365 seats the company reported in January.

The new Copilot comes three weeks after Microsoft reorganized its financial reporting around a similar idea, creating a segment called Agents and Infra and moving GitHub’s cloud revenue into its Microsoft 365 business.

“It’s no longer about building or selling one app or service, but about connecting the entire trajectory of a ‘job to be done,'” Nadella wrote in a note to investors about the change at the time.

Microsoft 365 cloud revenue, which covers business and consumer subscriptions including Copilot and now GitHub, reached $100.3 billion in fiscal 2026 under the new structure, up about 19%. Microsoft doesn’t disclose how much of that comes from Copilot.

“None of these things really matter unless they actually go to work inside of your companies and deliver real value,” Andreou said.

Microsoft plans to share more at its Ignite conference, Nov. 17-20 in San Francisco.