Key Takeaways from Microsoft Build 2025 on AI, Copilot, and NPUs

Written By:
Founder & CTO
May 22, 2025

Microsoft Build 2025 kicked off with a clear focus: empowering developers to build smarter, faster, and more securely with AI. At Microsoft Build is packed with updates that directly impact how developers design, optimize, and scale AI-driven software. Here's a breakdown of the most relevant announcement:Microsoft Build is packed with updates that directly impact how developers design, optimize, and scale AI-driven software. Here's a breakdown of the most relevant announcement

Developer-Centric Takeaways from Microsoft Build 2025
1. Windows AI Foundry replaces Copilot Runtime with a unified local AI platform

The renaming of Windows Copilot Runtime to Windows AI Foundry is more than cosmetic. This rebrand, announced at Microsoft Build 2025, aligns Windows with Azure AI Foundry, offering parity in lifecycle support, from model selection and optimization to fine-tuning and deployment, directly on-device.

For developers building latency-sensitive or privacy-preserving AI features, this creates a local-first stack capable of bypassing the cloud entirely.

2. Windows ML remains the core inferencing layer, with multi-silicon acceleration

At the core of Foundry is Windows ML, the inferencing engine that supports ONNX models and runs efficiently across a wide range of hardware:

  • CPU & GPU: Intel, AMD, NVIDIA
  • NPU acceleration: Qualcomm Hexagon, Intel Movidius, and more

This flexibility allows developers to bring their own models (BYOM) while still leveraging platform-optimized inference, without needing to rewrite for each hardware backend.

3. Foundry Local integrates model catalogs like Ollama and NVIDIA NIMs

With native access to open-source model catalogs, developers can now:

  • Search, preview, and deploy foundation models (LLMs, vision models)
  • Rapidly test model performance across workloads
  • Avoid custom integration overhead
  • Tailor models to local context without cloud latency

This capability, highlighted at Microsoft Build, makes it easier to build powerful local AI apps.

4. New On-Device AI APIs + Native LoRA Fine-Tuning

Inbox AI APIs on Copilot+ PCs now offer functions for:

  • Text summarization
  • OCR and image captioning
  • Object removal
  • Custom prompt workflows for dynamic UI interactions

In addition, LoRA fine-tuning is now supported natively for the Phi Silica SLM (Small Language Model). Developers can personalize models with their own data, directly on-device—without full retraining.

New APIs for Semantic Search & RAG

You can now build semantic search and retrieval-augmented generation (RAG) pipelines using local data, completely within Windows apps—no external cloud dependency required.

5. Model Context Protocol (MCP): Standardizing Agent-App Interactions

Windows 11 now includes native support for Model Context Protocol (MCP), allowing apps to act as context providers or skill endpoints for local AI agents.

Think of MCP as a universal adapter: agents can dynamically interface with any app exposing MCP hooks—like commands, views, or data—enabling a modular agentic system.

MCP is being integrated across Microsoft’s ecosystem, including:

  • GitHub Copilot Studio
  • Semantic Kernel
  • Azure AI Foundry
  • Dynamics 365
  • Windows itself

This unified approach was a key theme at Microsoft Build 2025, underscoring Microsoft’s commitment to seamless, scalable AI development.

6. App Actions: Declarative Entry Points for App Functionality

App Actions allow developers to expose granular app functions, like “generate report,” “start timer,” or “analyze image”, as invokable actions at the OS level. These actions are discoverable by Copilot, AI agents, and the system, providing deeper OS integration and opening new user acquisition channels.

Designed with intent-based invocation in mind, App Actions let your features surface contextually across Windows, reducing friction and boosting usage, all without modifying core app logic. This capability was highlighted as a key developer productivity enhancer at Microsoft Build 2025.

7. New Developer-Facing Security APIs: VBS Enclave SDK + PQC

The VBS Enclave SDK enables apps to execute sensitive operations in isolated, hardware-backed enclaves using Hyper-V-based Virtualization Based Security. Ideal for credential handling, DRM, or confidential inference workloads, this keeps code and data shielded from the OS or other processes.

Additionally, Microsoft Build introduced Post-Quantum Cryptography (PQC) APIs, helping developers future-proof apps against emerging quantum threats. These APIs allow early adoption of quantum-safe encryption algorithms, securing apps for the next generation.

8. Windows Subsystem for Linux (WSL) Is Now Open Source

In a major announcement at Microsoft Build 2025, Microsoft officially open-sourced WSL, including key components such as:

  • The WSL kernel
  • WSLg (GUI support)
  • The Mariner-based distro backend

Developers now have direct access to WSL internals and APIs, paving the way for:

  • Custom Linux integration layers on Windows
  • Deep tooling extensions
  • More community-driven feature development (e.g., sandboxed dev environments or WSL-native agent hosting)

Also announced was the upcoming open-sourcing of the GitHub Copilot Chat extension for VSCode, enabling developers to customize AI workflows directly inside their editor.

9. Dev Tooling Upgrades: Terminal, WinGet, PowerToys
  • Windows Terminal now supports tab tear-out, improved pane management, and deeper customization options.
  • WinGet adds support for package pinning, configuration files, and bulk installs, streamlining developer machine setup and CI/CD environments.
  • PowerToys introduces new modules that enhance automation and clipboard workflows, making it a must-have for power users scripting repetitive UI tasks.

These developer tooling upgrades were showcased at Microsoft Build 2025, underscoring Microsoft’s commitment to enhancing developer productivity and flexibility.

10. Microsoft Store: Developer-Focused Distribution Enhancements

At Microsoft Build 2025, Microsoft announced several updates to the Microsoft Store aimed at improving developer experience and app distribution:

  • Free developer registration now removes the paywall for publishing apps, lowering the barrier to entry.
  • The new Web Installer for Win32 apps allows one-click installs directly from the browser, no MSIX packaging required.
  • Expanded analytics and App Campaign programs offer developers deeper visibility into app usage, optimization tools, and store-driven promotional capabilities to boost engagement and growth.
11. Multi-Agent Systems with Copilot Studio (Preview)

Microsoft is making multi-agent architectures accessible through Copilot Studio, enabling developers to design systems where multiple AI agents collaborate by delegating and coordinating tasks autonomously.

These multi-agent systems can leverage:

  • Microsoft 365 Agent Builder
  • Azure AI Agents Service
  • Azure Fabric

This unlocks new possibilities for complex workflows such as multi-step automation, distributed problem-solving, and composable AI services that mimic human team dynamics.

Currently in preview, Copilot Studio invites developers to experiment with agent orchestration at scale, a highlight of this year’s Microsoft Build.

12. NLWeb: Transforming Websites into Agentic Apps

Natural Language Web (NLWeb) is a Microsoft initiative introduced at Microsoft Build 2025 aimed at converting traditional websites into agent-driven, conversational interfaces.

By enabling natural language queries and interactions directly against web content, NLWeb empowers developers to build agentic web apps that are more intuitive, context-aware, and interactive.

While the exact involvement of OpenAI remains unclear, NLWeb signals Microsoft’s commitment to embedding conversational AI deeper into everyday web experiences, pushing the boundaries of web interactivity.

13. GitHub Copilot Evolves: From Pair Programmer to Peer Programmer

At Microsoft Build 2025, Microsoft unveiled the new GitHub Coding Agent (“Project Padawan”), now generally available for Copilot Enterprise and Pro+ users. Unlike the classic Copilot, Project Padawan autonomously handles low-to-medium complexity tasks within well-tested codebases, including:

  • Adding new features
  • Bug fixing
  • Test extensions
  • Refactoring
  • Documentation improvements

This marks a significant evolution toward AI as a true collaborative peer, capable of more independent coding contributions rather than just offering suggestions.

14. Copilot Studio Gains “Pro” Developer Capabilities

Continuing the momentum from Microsoft Build, Copilot Studio is evolving from its low-code/no-code roots into a full-fledged platform for professional developers building complex AI agents.

New APIs for Microsoft 365 Copilot are being introduced, including a retrieval API currently in preview that allows developers to integrate intelligent data retrieval into their agents.

Crucially, Bring Your Own Model (BYOM) support from Azure AI Foundry is now in preview for Copilot Studio, enabling developers to deploy custom-trained models seamlessly within agent workflows, a major milestone for flexible, enterprise-grade AI solutions.

15. Integrated AI Security with Entra, Defender, and Purview

Microsoft is embedding security tools directly into Azure AI Foundry and Copilot Studio to protect AI applications throughout development and deployment, as highlighted at Microsoft Build 2025.

  • Entra Agent ID (now in preview) provides identity and access management tailored specifically for AI agents, supporting integrations across Microsoft tools and third-party platforms such as ServiceNow and Workday.

This initiative underscores Microsoft’s commitment to baking AI agent governance, compliance, and security into the AI development lifecycle, not just adding it as an afterthought.

Microsoft Build 2025 made it clear: AI is now a local-first, developer-first priority. With Windows AI Foundry unifying the model lifecycle, Copilot Studio enabling collaborative agents, and expanded hardware acceleration, Microsoft is delivering a full-stack AI platform built for real-world development.

Add in stronger security, open-sourced tools like WSL, and seamless deployment across platforms, developers now have everything they need to build smarter, faster, and more securely. The future of software is AI-native, and Build 2025 just handed developers the blueprint.

Connect with Us