Microsoft AI-103 : Developing AI Apps and Agents on Azure

  • Exam Code: AI-103
  • Exam Name: Developing AI Apps and Agents on Azure
  • Updated: Sep 14, 2026     Q & A: 159 Questions and Answers

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Microsoft AI-103 Exam Syllabus Topics:

SectionWeightObjectives
Implement information extraction and knowledge mining10–15%- Extract structured data from documents
  • 1. Process forms, invoices, and unstructured content
  • 2. Use Azure AI Document Intelligence
- Build knowledge bases and search solutions
  • 1. Implement Azure AI Search
  • 2. Create and manage vector indexes
  • 3. Design knowledge mining pipelines
Plan and manage Azure AI solutions25–30%- Manage AI solution development lifecycle
  • 1. Integrate with CI/CD pipelines
  • 2. Configure model and agent deployments
  • 3. Monitor and maintain AI workloads
- Design Azure AI infrastructure
  • 1. Plan for security, compliance, and responsible AI
  • 2. Design for scalability, availability, and cost optimization
  • 3. Select appropriate Azure AI Foundry services
Implement generative AI and agentic solutions30–35%- Build generative AI applications
  • 1. Build retrieval-augmented generation (RAG) solutions
  • 2. Integrate Azure OpenAI and other models
  • 3. Implement function calling and tool use
  • 4. Implement prompt engineering and optimization
- Design and implement intelligent agents
  • 1. Select agent architecture patterns
  • 2. Manage state, memory, and context
  • 3. Integrate agents with external systems and data sources
  • 4. Implement multi-agent workflows and orchestration
Implement computer vision solutions10–15%- Implement image analysis and processing
  • 1. Extract text and structure from images
  • 2. Implement object detection and image classification
  • 3. Use Azure AI Vision services
- Build multimodal solutions
  • 1. Combine vision and language capabilities
  • 2. Process and analyze video content
Implement text and speech analysis solutions10–15%- Implement natural language processing
  • 1. Use Azure AI Language services
  • 2. Perform sentiment analysis, entity recognition, and summarization
  • 3. Build conversational language understanding
- Implement speech capabilities
  • 1. Speech translation and speaker recognition
  • 2. Speech-to-text and text-to-speech integration

Microsoft Developing AI Apps and Agents on Azure Sample Questions:

Question #1

A team wants to deploy a model from the Foundry catalogue with the fastest possible setup, pay only for the tokens they consume, and avoid provisioning any virtual machine (VM) quota. Which deployment option fits?

  • A. A local container running on a developer workstation
  • B. Serverless API deployment, also called models as a service (MaaS)
  • C. Self-hosted deployment on Azure Kubernetes Service
  • D. Managed compute (managed endpoint) deployment
Reveal Solution  Discussion  0

Correct Answer: B  🗳️

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Question #2

Case Study 1 - Contoso, Ltd
Overview
Company Information
Contoso, Ltd is a multinational retail company that builds, deploys, and manages generative AI and agent-based solutions by using Microsoft Foundry.
Existing Environment
Identity Environment
Contoso uses Microsoft Entra ID for identity management, authentication, and authorization capabilities that enable agents to access organizational resources and services.
Contoso recently formed a new AI engineering team named Agent1Dev Team to optimize and maintain existing AI solutions.
The team collaborates with solution architects, DevOps engineers, and security engineers to design, implement. monitor, and secure AI applications.
Contoso also has a team named Agent1Test Team that is responsible for validating AI solutions before the solution deployments.
Generative Environment
Contoso has a Microsoft Foundry deployment that contains two projects named Project1 and Project2.
Project1
Project1 contains a customer support agent named Agent1 that assists customers with product inquiries and troubleshooting requests.
Agent1 has the following configurations:
- Agent1 uses a base model deployment.
- A safety evaluation pipeline is NOT enabled.
- Tool invocation approval workflows are NOT enabled.
- Conversation memory constraints are NOT configured.
Agent1 interacts with customers by using digital support channels and answers general questions about Contoso products.
Project1 is deployed to an Azure region located in the European Union (EU).
Agent1Dev Team will use Project1 to optimize and maintain Agent1.
Project2
Project2 contains a deployed video generation model. The marketing department at Contoso has access to Project2 and plans to use the model to develop a video creation solution.
Development of the solution is incomplete.
Data Environment
Contoso stores product-related information in Azure resources that support AI applications.
The Azure environment contains an Azure Blob Storage account named storage1 that stores product detail sheets for all the Contoso products.
The product sheets include specifications, feature descriptions, and product support information that Agent1 can use to answer customer questions. The product sheets are stored in the PDF format.
Problem Statements
Contoso identifies the following issues:
- Agent1 has only general knowledge of the Contoso products.
- A recent chat interaction with Agent1 was analyzed for sentiment. The results of the analysis have NOT been processed yet.
- Agent1 does NOT use the detailed product information in the product sheets stored in storage1 when responding to customer questions.
- The finance department at Contoso reports that vendor invoices must be reviewed manually to ensure that the invoices match the terms defined in the vendor contracts. The invoices contain tables, logos, and varied layouts that make the documents difficult to process consistently.
Requirements
Planned Changes
Contoso plans to implement the following changes:
- Implement a solution for Project1 that analyzes the vendor invoices by evaluating both the visual layout and the textual content of the invoices, so that the invoice details can be verified against the vendor contract terms.
- Update the base model deployment used by Agent1 and standardize the model version to ensure continuity and consistent responses.
- Enable Agent1 to retrieve and use the detailed product information from the product sheets stored in storage1.
- Implement an indexing solution for the product sheets that Agent1 can use to answer customer questions.
- Complete the development of the video creation solution.
Technical Requirements
Contoso identifies the following technical requirements:
- The model deployment used by Agent1 must support scalable, high-throughput generative AI workloads and dynamically scale to handle variable customer support traffic, without requiring reserved throughput capacity.
- The product sheets must be processed by using an indexing pipeline that enables semantic and vector search, so that Agent1 can retrieve the relevant product information.
- Responses generated by using the product sheet information must be relevant, complete, and accurate.
- Agent1 must be able to use the product sheets to answer natural language questions about product details.
- The model version used by Agent1 must remain consistent to ensure stable responses.
- The data processed by the model must remain within the EU.
Security and Compliance Requirements
Contoso identifies the following security and compliance requirements:
- API keys must NOT be used to access Foundry-deployed models.
- Access to the Azure resources must follow the principle of least privilege.
- The developers at Contoso must authenticate to Microsoft Foundry resources by using Microsoft Entra authentication.
- Access to Project1 must be assigned to the members of Agent1Dev Team by using a security group named SC_Agent1_Dev.
- Access to Project1 must be assigned to the members of Agent1Test Team by using a security group named SC_Agent1_Test.
- Agent1 must never reveal customer information, even if a document that contains customer data is added erroneously to the product sheet repository in storage1.
- The product sheets might contain images that include embedded text. Agent1 must be protected from malicious instructions potentially hidden within the images.
Business Requirements
Contoso identifies the following business requirements:
- Users that interact with Agent1 must have a personalized experience in future interactions, including the ability for Agent1 to retain conversation context and recall relevant information from previous interactions.
- Agent1 must answer questions only about the products sold by Contoso.
You need to configure personalized user interactions for Agent1. The solution must meet the business requirements.
What should you include in the solution?

  • A. knowledge
  • B. tools
  • C. memory
  • D. guardrails
Reveal Solution  Discussion  0

Correct Answer: C  🗳️

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Question #3

You are building a web app named App1 that generates responses by using a model deployed to a Microsoft Foundry project named Project1.
Before sending the prompts to the model, App1 must retrieve documents by using Azure AI Search.
You need to integrate Project1 and App1. The solution must meet the following requirements:
- Multiple client applications must use the same search configuration.
- A security policy must prevent key-based authentication.
- Administrative effort must be minimized.
What should you do?

  • A. Enable a managed identity for each application and call Azure AI Search directly.
  • B. Create a custom HTTP connection in Foundry and manually configure Azure AI Search endpoints per application.
  • C. Call Azure AI Search directly from each application by using Microsoft Entra authentication.
  • D. Configure an Azure AI Search connection in Project1 and reference the connection in each application.
Reveal Solution  Discussion  0

Correct Answer: D  🗳️

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Question #4

You are developing a new sales system that will process user-generated video and text from a public-facing website.
You plan to notify users that their data has been processed by the sales system.
Which responsible AI principle does this help meet?

  • A. transparency
  • B. fairness
  • C. inclusiveness
  • D. reliability and safety
Reveal Solution  Discussion  0

Correct Answer: A  🗳️

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Question #5

An agent must call your organisation's internal inventory system, which is exposed as a set of tools. You want the tool definitions maintained centrally and reusable across several agents rather than redefined in each agent. Which Foundry capability fits?

  • A. Add a Model Context Protocol (MCP) server as an agent tool
  • B. Increase the model's context window
  • C. Fine-tune the model on the inventory system's API schema
  • D. Enable the code interpreter tool
Reveal Solution  Discussion  0

Correct Answer: A  🗳️

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