Extension `azure.ai.agents` didn't start due to timeout.

[jochenvw]

• on azd 1.23.11 (updated latest via winget just now)
• on extension version 0.1.18-preview (updated with azd extension upgrade)

simple azd up command does not work:

C:\_CODE\code-first-agent>azd up --debug
2026/03/25 10:26:21 main.go:58: azd version: 1.23.11 (commit 8a12ac217ec685745fa195698b3c84387c922b2b)
2026/03/25 10:26:21 detect_process.go:56: detect_process.go: Parent process detection: depth=0, pid=29552, ppid=16288, name="cmd.exe", executable="C:\\Windows\\System32\\cmd.exe"
2026/03/25 10:26:21 detect_process.go:56: detect_process.go: Parent process detection: depth=1, pid=16288, ppid=16220, name="explorer.exe", executable="C:\\Windows\\explorer.exe"
2026/03/25 10:26:21 detect_process.go:56: detect_process.go: Parent process detection: depth=2, pid=16220, ppid=0, name="", executable=""
2026/03/25 10:26:21 detect_process.go:72: detect_process.go: Parent process detection: no agent found in process tree
2026/03/25 10:26:21 detect.go:25: Agent detection result: detected=false, no AI coding agent detected
2026/03/25 10:26:21 project.go:152: Reading project from file 'C:\_CODE\code-first-agent\azure.yaml'
2026/03/25 10:26:21 middleware.go:100: running middleware 'debug'
2026/03/25 10:26:21 middleware.go:100: running middleware 'ux'
2026/03/25 10:26:21 middleware.go:100: running middleware 'telemetry'
2026/03/25 10:26:21 telemetry.go:68: TraceID: 7b4a310fe001f007501abc54a592ddfd
2026/03/25 10:26:21 middleware.go:100: running middleware 'error'
2026/03/25 10:26:21 middleware.go:100: running middleware 'loginGuard'
2026/03/25 10:26:22 middleware.go:100: running middleware 'hooks'
2026/03/25 10:26:22 hooks.go:130: service 'seattle-hotel-agent' does not require any command hooks.
2026/03/25 10:26:22 hooks.go:78: azd project does not contain any command hooks, skipping command hook registrations.
2026/03/25 10:26:22 middleware.go:100: running middleware 'extensions'
2026/03/25 10:26:22 server.go:141: azd gRPC Server listening on port 56656
2026/03/25 10:26:22 extensions.go:122: Starting 1 extensions...
2026/03/25 10:26:27 extensions.go:193: 'azure.ai.agents' extension failed to become ready after 5.0001347s: context deadline exceeded
WARNING: Extension azure.ai.agents didn't start due to timeout.

WARNING: 1 extension did not start. Its features will be unavailable.

Run with --debug for details.

2026/03/25 10:26:27 extensions.go:326: All 1 extensions completed startup in 5.0274181s

C:\_CODE\code-first-agent>azd extension list
Id                        Name                                  Latest Version  Installed Version  Source
azure.ai.agents           Foundry agents (Preview)              0.1.18-preview  0.1.18-preview     azd
azure.ai.finetune         Foundry Fine Tuning (Preview)         0.0.17-preview  0.0.17-preview     azd
azure.ai.models           Foundry Custom Models (Preview)       0.0.4-preview   0.0.4-preview      azd
azure.appservice          Azure App Service                     0.1.0                              azd
azure.coding-agent        Coding agent configuration extension  0.6.1                              azd
microsoft.azd.concurx     Concurx                               0.1.0                              azd
microsoft.azd.demo        Demo Extension                        0.6.0                              azd
microsoft.azd.extensions  azd extensions Developer Kit          0.10.0                             azd