7 essential Copilot updates businesses need to understand in 2026

Microsoft Copilot has already rolled out a series of updates that subtly but significantly change how work happens across Microsoft 365.

Individually, some of these changes may appear incremental or technical. Taken together, they signal something much bigger: Copilot is evolving from a helpful assistant into an embedded intelligence layer across everyday business activity.

Below is a clear breakdown of the seven most important Copilot updates, what has changed, and why they matter for both businesses and employees.

 

1.  GPT-5.2 Now Powers Copilot Chat

Copilot Chat is now powered by GPT-5.2, the latest generation of the underlying language model.

What’s changed

Users can now choose between three response modes:

• Quick response – fast, surface-level answers using limited context
• Think deeper – slower but more detailed responses, drawing from meetings, documents, Teams activity, and other work signals
• Auto (default) – Copilot selects the most appropriate mode automatically

Why this matters

• Higher-quality answers with less prompt engineering
• More reliable summaries, updates, and insights
• Less need for users to rephrase or refine questions

The result is a more natural, predictable Copilot experience that adapts to the task rather than forcing users to adapt to the tool.

 

2.  Copilot Can Use Chat History (Early Preview)

Until recently, Copilot lacked conversational memory, a feature user had come to expect from other AI tools.

That is now changing.

Copilot can begin referencing past conversations to improve future responses, enabled

through Microsoft’s new Work IQ concept.

Business impact

• Copilot gradually learns how individuals work
• Responses improve over time without additional setup
• Less repetition and re-explaining for employees

This capability is currently in early preview, but once fully available, it will significantly improve consistency and relevance across Copilot interactions.

 

3.  Claude Is Now a First-Class Copilot Agent

Microsoft has introduced Claude as an official agent within Copilot, powered by Anthropic.

Key details

• Available via the Copilot Agent Store
• Uses the Claude Sonnet 5 model
• Particularly strong in writing, reasoning, and structured thinking
• Operates on web-based data rather than internal Microsoft 365 data

Important note: For UK and EU businesses, Claude is disabled by default due to data processing considerations and must be explicitly enabled.

Why this matters strategically

This marks a shift away from a single-model AI approach. Businesses now have the flexibility to:

• Use different AI models for different types of work
• Reduce reliance on one provider
• Select the best model for content-heavy or analytical tasks

 

4.  The People Agent Enables Instant Expertise Discovery

The new People Agent allows users to ask Copilot questions such as:

• Who should I speak to about this project?
• Who has experience in a specific area?
• Who reports to whom?
• Help me prepare for a meeting with this person

Copilot analyses emails, meetings, Teams activity, SharePoint, and OneDrive to surface relevant insights.

Why this matters

• Less time spent searching or asking around
• Faster decisions and smoother collaboration
• Reduced friction across departments

For employees, it removes guesswork. For businesses, it eliminates a quiet but persistent productivity drain.

 

5.  Copilot Chat History Is Now Searchable

Copilot Search now includes previous Copilot chats as a searchable source.

What this solves

• No more scrolling through long chat histories
• Easy continuation of previous work
• Copilot conversations become reusable knowledge

This effectively turns Copilot into a living work log rather than a series of disconnected interactions.

 

6.  Copilot Agents Can Create Documents and Charts

Custom agents built in Copilot Studio previously had a major limitation: they could not create files.

That restriction has now been removed.

By enabling a new setting in the agent builder, agents can now:

• Generate Word documents
• Create charts
• Produce downloadable outputs

Real-world use cases

• HR agents generating policy summaries
• Finance agents producing reports
• IT agents creating technical documentation

This moves Copilot agents beyond answering questions and into delivering tangible, work-ready outputs.

 

7.  Copilot Can Explain Slides in PowerPoint

Within PowerPoint, users can now right-click a slide and select Explain. Copilot will:

• Describe the meaning of the slide
• Explain why it exists
• Show how it fits into the overall presentation

Why this is valuable

• Faster onboarding to unfamiliar decks
• Better preparation before meetings
• Reduced reliance on colleagues for context

This is particularly useful in large businesses where presentations frequently change hands.

 

What This All Means

Individually, these updates are helpful. Collectively, they point to a clear direction:

• Copilot is becoming context-aware
• AI is moving closer to real work outputs
• Businesses are being given genuine model choice
• Knowledge and people discovery are increasingly automated The businesses that benefit most will be those that:
• Set clear guidance on AI usage
• Enable features intentionally rather than by default
• Train teams on when and how to use Copilot effectively

Without that structure, even powerful tools risk becoming noisy or underused.

If 2025 was the year of AI experimentation, 2026 is shaping up to be the year businesses begin embedding AI into how work actually gets done.

 

If you want to explore what Copilot and Copilot agents could do for your business, we also run dedicated workshop days, from Copilot Studio Training and Governance Framework sessions to hands‑on Hackathon workshops where you can build your first agent. Just drop the iThink 365 team a message: https://www.ithink365.co.uk/contact-us/