Microsoft unveiled its Nvidia -powered Surface Laptop Ultra during an event in San Francisco on Wednesday.

Designed to compete with Apple's MacBook Pro laptops for AI, video workloads, and gaming, the $2,599 Laptop Ultra is Microsoft's most powerful Surface to date, thanks to its Arm (ARM)-based Nvidia RTX Spark processor.

Microsoft executive vice president of Windows and devices Pavan Davuluri said the chip features up to a staggering 128GB of unified memory, giving it the ability to run demanding AI models that other laptops can't.

According to Tom Mainelli, IDC's group vice president of device and consumer research, the Surface Laptop Ultra will likely appeal to early adopters across both the consumer and enterprise spaces.

"Ultimately, the cost is a big driver," Mainelli told Yahoo Finance. "But you're also going to get to a point where you want to make decisions about what data goes to the cloud, what data stays locally, and then you will be thinking about the orchestration layers."

Orchestration is the process of determining which AI models and agents to use, when, and for what purpose. For instance, you wouldn't want to use an expensive cloud-based model like OpenAI's (OPAI.PVT) GPT-6 Astra to perform a task that a free, local model installed on your PC can handle.

During Wednesday's event, Davuluri explained that the company is bringing hybrid AI capabilities and AI agent security to Windows via a series of updates.

The enterprise and consumer tech industries have been leaning heavily into local AI models as an alternative to cloud-based models and agents. Kicking off a new arms race in the laptop and desktop space.

Microsoft stock rose 0.2% during premarket trading on Thursday, while Nvidia fell 0.6%.