Microsoft Foundry Uses OpenTelemetry to Bring Deep Observability to AI Agent Runs

Microsoft Foundry offers a structured observability pipeline for AI agents, built on OpenTelemetry semantic conventions and backed by Azure Monitor Application Insights. Unlike flat logs, agent tracing captures the full execution tree of a single agent run — including model calls, tool invocations, retrievals, and handoffs to other agents. Each step in the tree is recorded as a span with its own latency, token cost, and failure data, enabling engineers to pinpoint exactly where errors originate across complex multi-step workflows. The platform also supports a continuous evaluation loop that automatically grades production traffic by sampling structured trace data, removing the need for manual review. Microsoft positions this tracing capability as a core architectural feature rather than an add-on, sitting alongside evaluation and monitoring as a first-class pillar of the Foundry platform.