Microsoft says China-aligned hackers used AI agents in ConnectWise supply-chain attack targeting 2,250-plus organizations

Microsoft said on October 21 that a China-state aligned group it tracks as Storm-0940 was behind the recent supply-chain compromise of IT services company ConnectWise, and that the group used AI agents to automate the campaign.

How the AI agents were used

According to Microsoft's threat intelligence report, as early as September 2026 Storm-0940 used ARTEX, an open-source penetration-testing framework, to automate attacks on hundreds of organizations worldwide. ARTEX is a multi-agent system that can be connected to any AI model and can run a penetration test from reconnaissance through data exfiltration with little human involvement.

After compromising ConnectWise Cloud Backup application identities, the group used the access those apps had already been granted to attempt sign-ins to more than 2,250 Microsoft 365 customer tenants, at a peak of 2,900 attempts per minute. In some environments the agents moved on to Microsoft Graph reconnaissance, application credential changes to establish persistence, and changes to identities, groups and privileged roles. In multiple instances, the time from initial targeting to privileged access was less than three hours, Microsoft said.

CyberScoop reported that in a four-day stretch ending October 14, just before turning to ConnectWise, the group ran a password-spraying campaign against 327 accounts at eight organizations, generating more than 151,000 failed logons. Targeted sectors included aerospace and defense, energy, financial services, government, semiconductors and think tanks.

Responses

ConnectWise CEO Manny Rivelo said it "appears that a China state-aligned group was responsible," according to Reuters, adding that the company had contained the affected application connections and was restoring services in phases, but that unauthorized access already established inside individual customer tenants requires separate review. A spokesperson for the Chinese Embassy in Washington told Reuters that China "opposes and fights hacking activities in accordance with the law" and opposes "smears and attacks against China under the excuse of cybersecurity issues."

Microsoft said the activity did not result from a compromise of, or vulnerability in, its own systems or products, and that successful authentication does not necessarily mean customer data was accessed. It urged customers to review service-principal sign-ins, investigate unexpected credential or privilege changes and preserve logs.

The company warned that agents can work around the clock and try several breach paths at once, sharply reducing the time defenders have to detect and respond.

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Sources: Reuters, Microsoft Security Blog, CyberScoop, Dark Reading. Image: Chesnot/Getty Images (via CyberScoop).