VS Code 1.123 introduces massive upgrades for persistent AI developer workflows

Microsoft updates VS Code at Build 2026, bringing seamless cross-machine AI sync, advanced research tools, and smarter sandboxed terminal fixes.

Microsoft has just released Visual Studio Code 1.123 alongside its annual developer conference, Build 2026. This release, as always, has a heavy focus on advanced AI agent integration and making the built-in browser more robust. Notably, this update brings big sync changes that keep your AI agents persistent across sessions.

With this update, VS Code now supports cross-machine syncing for chat histories, touched files, repository contexts, and related PRs via GitHub accounts, tying users even more into Microsoft’s developer ecosystem. This update also introduces the new /chronicle command that allows you to query past sessions using natural language, generate instant standup reports, and get personal productivity insights.

Microsoft has also made some improvements to network-dependent operations, it explains:

“When a terminal command that is run by a local agent requires access to domains that are not configured as allowed domains, the command is automatically retried inside the sandbox with unrestricted network access. After that, if it still fails, it falls back to unsandboxed execution. This allows network-dependent operations such as git fetch to finish, while keeping filesystem protections in place.”

Microsoft has not stopped there; in this update, it also allows developers to drag, drop, and pin multiple agent sessions side-by-side for easy code comparisons in real-time. It also introduces the Research Agent, accessible via /research. This is a read-only, depth-optimized tool that gets data from the web, local codebase, and GitHub to give you a Markdown report on complex APIs or unfamiliar code.

Now, let’s talk about the integrated browser and some security enhancements. VS Code 1.123 features enhanced screenshot capture tools that allow for targeted Area Screenshots and Full Page Screenshots to send layout context instantly to AI chat. The address bar has also been revamped, supporting favorite pages and tab management. Finally, on the security front, this update introduces a safety-first two-hour delay on third-party extension auto-updates to safeguard against compromised or buggy releases.

This release is now available for Windows, Mac, and Linux. If you have VS Code, keep an eye out for the update availability notification. If you still don’t have VS Code, you can get it here.

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Posted Thursday 4 June 2026 at 5:57 pm AEST (my time).

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