Microsoft 365 Copilot: Wave 3

Microsoft 365 Copilot Wave 3 is the latest “version/release update” of Microsoft 365 Copilot, which introduces agentic AI capabilities through Copilot Cowork to execute multi-step tasks across Microsoft 365 apps.

• Wave 1 was the initial introduction of Copilot in Microsoft’s Office apps, with Copilot sitting along side your documents, emails, and presentations.
• Wave 2 expanded Copilot across Microsoft’s ecosystem, with new collaboration experiences and tools like Copilot Studio, expanded models and deeper integration across Microsoft 365 along with new first party agents like Researcher and Analyst as well as the Agent Builder in Copilot Chat.

Wave 3 represents a major evolution of the AI assistant, moving beyond simple chat or single-turn prompts to agentic workflows that can plan, act, and execute tasks over time within Word, Excel, PowerPoint, and Outlook. At the core of Wave 3 is Copilot Cowork, a managed integration of Anthropic’s Claude Cowork technology, which allows users to delegate complex, multi-step work while staying in the loop on progress.

This enables tasks such as drafting documents, analysing data, generating presentations, and scheduling meetings to run autonomously in the background, improving productivity and multitasking.

Aspects of Wave 3 have been tested as a research preview through Microsoft’s Frontier program. The update announced more updates, and timelines for broader enterprise adoption planned. It was announced along side the Microsoft 365 E7 announcement dubbed “The Frontier Suite” – which bundles Copilot, Agent 365 (a control plane for managing AI agents).

What is new in M365 Copilot Wave 3?

Wave 3 is all about, agentic in‑app editing. This started as Agent Mode in apps which was a richer “vibe” working approach in apps {I have covered this previously}. Being known now as “Co-word”, Copilot can now execute multi‑step tasks inside documents and spreadsheets (draft full Word docs, build formulas/charts in Excel, generate on‑brand PowerPoint decks), do “things” for you in rather than just suggesting text.  

• Copilot Cowork (long‑running agents): This leverages a Claude‑powered agent framework that breaks complex requests into steps, runs them over time, and surfaces progress for review; currently in Frontier preview. (more below).
• Claude Sonnet will also be available in all Copilot Chat experiences for all licensed users via the Frontier program, before wider release to everyone. Users will see a model selector dropdown in Copilot Chat where Sonnet can be chosen as a model alongside the OpenAI models. This needs to be enabled by admins in UK/ EU regions.
• Copilot in PowerPoint, gets enhanced capabilities to keep presentations crisp and on-brand. It respects organisation templates, colours, layouts, and styles, transforming text into visuals, charts, timelines, or diagrams
• Big improvements to Copilot’s chat features, allowing users to easily modify documents, presentations, spreadsheets, and emails directly from the chat interface.
• Agent 365 will GA in May 2026. It provides an agent registry, access control ( via Entra ID) , visualisation of agent activity, interoperability, and security. It is a  per-user license rather than per agent license, so about a user creating “on behalf of” agents and leveraging the advanced governance features to manage agents and workflow.
• Work IQ grounding & AI model choice: Copilot uses Work IQ to ground outputs in your files, meetings and organisation context; Microsoft will let customers choose models (OpenAI, Anthropic, upcoming GPT/Claude variants) over time.

How does Copilot Cowork work?

Cowork will be able to take actions on your behalf. These will be multi-step tasks like rescheduling meetings and protecting focus time, meeting prep by pulling together documents, emails, Teams messages and then creating a slidecdeck, conducting researching on a company, or creating a project plan with Excel, accompanying documents, and a presentation deck. Users will be able to can keep on engaging with it as it works and steer the output as it goes.

Unlike Anthropic’s original Claude Cowork, Microsoft’s version will not allow access to local files or third-party apps directly, which currently limits its autonomy outside Microsoft 365. Despite this, Copilot Cowork represents a significant step toward continuous, AI-driven workflows embedded in enterprise productivity tools.

Microsoft also of course align this with their enterprise-grade audit and control, and they’re layering in the Work IQ foundation.

Excited for Wave 3

In short, Copilot Wave 3 promises to further transform Microsoft 365 Copilot from a conversational assistant into an enterprise grade AI agent capable of executing complex, multi step tasks across applications while maintaining security, governance, and visibility. Its hot on the heals and in partnership with Anthropic. All models and inference runs in the Microsoft Azure Cloud.

As always, adoption and change management becomes an always on activity to ensure people get awareness and maximum value from the new features and investments.

Anthropic features and models need to be enabled (opt-in) by IT Admins in UK and EU regions but are on by default in other regions.