LevelUpWith

Explore / Microsoft Azure AI Apps and Agents Developer (AI-103) Exam Prep / Lesson 2

Lesson 2: Choosing Models: LLMs, SLMs, Multimodal and Foundry Tools

[Plan and manage an Azure AI solution – Choose the appropriate Foundry services for generative AI and agents] Shows how to choose an appropriate model for each task among large language models, small language models, multimodal models and prebuilt Foundry Tools, using the Foundry model catalog, benchmarks and the trade-offs between cost, latency and capability.

Free to read, no account needed. Part of Microsoft Azure AI Apps and Agents Developer (AI-103) Exam Prep.

By the end of this level you'll be able to

  • Pick an LLM, a small language model, a multimodal model or a Foundry Tool for a given scenario and justify the choice
  • Compare candidate models in the Foundry portal model catalog using model cards, benchmarks and the deployment types each model supports
  • Spot when a prebuilt Foundry Tool (for example Azure Translator or Azure Content Understanding) beats prompting a general model

Why model choice is a planning skill

The AI-103 study guide's first bullet under Plan and manage an Azure AI solution is: "Choose an appropriate model for each task, including large language models (LLMs), small language models, multimodal models, and Foundry Tools." The guide is Microsoft's own document and is free on Microsoft Learn. This course is independent of Microsoft and not endorsed by it, and it can't promise you a pass.

Think of it like picking a vehicle. You wouldn't send an articulated lorry to deliver one letter, and you wouldn't send a bicycle to move a house. Models work the same way. The strongest model is often the wrong pick, because cost, latency and data rules count as much as raw capability.

The four options

Option What it is Reach for it when Trade-off
LLM (e.g. gpt-4.1) Large general-purpose model Multistep reasoning, complex instructions, agents planning tool calls Highest cost per token, slower
SLM (e.g. Phi-4-mini-instruct, about 3.8B parameters) Small language model High-volume, narrow, latency-sensitive text tasks like classification, routing and short extraction Weaker on open-ended reasoning
Multimodal model (e.g. Phi-4-multimodal-instruct: text, vision and speech input) Takes more than text as input The input is an image, a chart, audio or a mix Usually costs more than text-only models of the same size
Foundry Tool (e.g. Azure Translator, Azure Content Understanding) Prebuilt, task-specific service (formerly Azure AI services) The task is a well-defined commodity: translation, OCR, field extraction, speech Less flexible, but predictable output and pricing

Rule of thumb from production: start with the smallest thing that meets your quality bar. Move up a tier only when evaluation shows you need to.

Walkthrough 1: comparing models in the Foundry portal

The model catalog covers foundation, reasoning, small, multimodal, domain-specific and industry models. It splits them into Foundry Models sold by Azure (Microsoft support, enterprise SLAs) and Foundry Models from partners and community (for example Anthropic and Hugging Face, supported by their providers).

To shortlist models:

  1. Open Models in the Foundry portal and use the filters. Useful ones include Inference tasks (chat completion, embeddings…), Supported features (reasoning, tool calling), Deployment options, Region, Lifecycle (Preview / Generally available / Deprecated) and Collections.
  2. Open a model card. Check Quick facts, then the Details tab (description, version, supported data types), Benchmarks, License and Deployments (your existing deployments of that model).
  3. Select View leaderboard. The model leaderboards rank LLMs and SLMs on quality, safety, cost and throughput. Trade-off charts plot two metrics against each other (for example quality versus cost), and leaderboards by scenario match benchmarks to a use case.
  4. Select Compare models to see your shortlist side by side.

Gotcha: public benchmarks are a starting filter, not a verdict. Always run your own prompts and data before you commit.

Walkthrough 2: check the deployment types before you fall in love

A model you can't deploy the way you need is the wrong model. All deployment types run the same inference, but billing, scale and data processing differ:

  • Global Standard: pay per token. Requests can be processed in any Azure region.
  • Data Zone Standard / Data Zone Provisioned: processing stays inside a Microsoft-defined data zone (US, EU or APAC).
  • Provisioned types: reserved capacity, giving guaranteed throughput and steadier latency.
  • Global Batch / Data Zone Batch: large asynchronous jobs at a 50% discount.
  • Developer: a cheap way to evaluate fine-tuned models, with no data residency.

If a scenario says "EU data must stay in the EU", a model that only offers Global Standard drops off your shortlist.

Walkthrough 3: same code, different model

On the v1 API, swapping models means changing the deployment name, so A/B testing an LLM against an SLM costs very little:

from openai import OpenAI
from azure.identity import DefaultAzureCredential, get_bearer_token_provider

# Keyless auth: Entra ID token, refreshed automatically
token_provider = get_bearer_token_provider(
    DefaultAzureCredential(), "https://ai.azure.com/.default"
)

client = OpenAI(
    base_url="https://YOUR-RESOURCE.openai.azure.com/openai/v1/",  # note the /openai/v1/ suffix
    api_key=token_provider,
)

ticket = "My invoice was charged twice this month."
for deployment in ["gpt-4.1", "gpt-4.1-nano"]:  # your deployment names
    r = client.responses.create(
        model=deployment,
        input=f"Classify as billing, technical or other. One word.\n{ticket}",
    )
    print(deployment, "->", r.output_text)
# gpt-4.1      -> billing
# gpt-4.1-nano -> billing   <- same answer, a fraction of the cost and latency

If the small model matches the big one on a few hundred real tickets, ship the small one.

Walkthrough 4: when a Foundry Tool beats prompting

Say you need to translate 40,000 product descriptions into German. You could prompt an LLM. Azure Translator in Foundry Tools is a dedicated neural machine translation service with real-time and batch translation across 100+ languages, plus language detection:

curl -X POST "https://api.cognitive.microsofttranslator.com/translate?api-version=3.0&to=de" \
  -H "Ocp-Apim-Subscription-Key: $TRANSLATOR_KEY" \
  -H "Ocp-Apim-Subscription-Region: westeurope" \
  -H "Content-Type: application/json" \
  -d '[{"Text": "Waterproof hiking boots with steel toe cap."}]'
# [{"detectedLanguage":{"language":"en","score":1.0},
#   "translations":[{"text":"Wasserdichte Wanderschuhe mit Stahlkappe.","to":"de"}]}]

There's no prompt to maintain, no chatty preambles to strip out, and the output shape is the same every time. In the same way, Azure Content Understanding in Foundry Tools pulls structured content out of documents, images, audio and video, which saves you hand-writing OCR-plus-prompt pipelines.

Pick a Foundry Tool when the task is standard, high-volume and needs a predictable output shape. Pick a general model when the task needs open-ended reasoning, tone or domain judgement that a fixed API can't express.

What the exam asks about this

Expect short scenarios with a hidden constraint. The scenario names a requirement, such as lowest latency, minimise cost, image input, data residency or no custom prompt maintenance, and the right answer is the option that meets that constraint. The most powerful model is a common wrong answer. Know the catalog vocabulary as well: model card tabs, leaderboards, trade-off charts, Compare models and the deployment-type names.

Key takeaways

  • LLMs are for complex reasoning, SLMs for cheap, fast, narrow tasks, multimodal models for non-text input, and Foundry Tools for standard commodity tasks.
  • Shortlist with catalog filters, inspect model cards, then compare using leaderboards, trade-off charts and Compare models.
  • Check the supported deployment types (Global, Data Zone, Provisioned, Batch) early, because residency and throughput needs can rule a model out.
  • Benchmarks narrow the field. Your own evaluation decides.
  • On the exam, the right answer is whatever meets the scenario's stated constraint, which is often not the biggest model.

A 6-question knowledge check follows this lesson in the app, free and without an account.

Keep going: levels 3 and 4 are free

Create a free account to open the next two levels, save your progress and pick up where you left off. No card needed.

Next: Level 3, Choosing Foundry Services for Each Workload.

Create a free account →See the whole course

More like this

  • Microsoft Security, Compliance, and Identity Fundamentals (SC-900) Exam Prep

    Learn every skill listed in Microsoft's SC-900 study guide (skills measured as of October 21, 2026): security, compliance and identity concepts, Microsoft Entr…

    Exam prep · SC-900 · IT Support, Networking & Security · Capable · 18 levels · 4 free · Professionally curated by levelupwith.com

  • Microsoft Fabric Analytics Engineer (DP-600) Exam Prep

    Prepare for Microsoft DP-600 under the skills measured as of October 19, 2026. The course covers every bullet in Microsoft's free study guide on Microsoft Lear…

    Exam prep · DP-600 · Data & Analytics · Expert · 48 levels · 4 free · Professionally curated by levelupwith.com

  • Microsoft Azure Fundamentals (AZ-900) Exam Prep

    Learn to pick the cloud model, service type or Azure service that fits a scenario and explain why the alternatives do not, across every skill in the 20 July 20…

    Exam prep · AZ-900 · Cloud & Compute · Capable · 17 levels · 4 free · Professionally curated by levelupwith.com

  • Microsoft Azure Administrator (AZ-104) Exam Prep

    Work through every bullet of the AZ-104 skills measured as of April 17, 2026, learning each task in the Azure portal, Azure CLI, PowerShell, and ARM templates…

    Exam prep · AZ-104 · Cloud & Compute · Expert · 60 levels · 4 free · Professionally curated by levelupwith.com

  • Support Pro: Helping Users Move to Microsoft 365

    Help users get through a move from Google Workspace to Microsoft 365, from the week before cutover to the first tickets afterwards. You will learn what moves a…

    Course · Microsoft · Suite Support Pro: Configure and Fix · Expert · 40 levels · 4 free · Professionally curated by levelupwith.com

  • Microsoft 365 Support Pro: Copilot for End Users

    Learn to work out which Copilot a user actually has, and to fix the everyday Copilot tickets: missing buttons, licence and sign-in problems, files Copilot can'…

    Course · Microsoft · Suite Support Pro: Configure and Fix · Expert · 36 levels · 4 free · Professionally curated by levelupwith.com