diff --git a/.azd-setup/src/requirements.txt b/.azd-setup/src/requirements.txt
index 42ee0d5..50c902b 100644
--- a/.azd-setup/src/requirements.txt
+++ b/.azd-setup/src/requirements.txt
@@ -7,7 +7,7 @@ aiohttp==3.12.14
 azure_ai_agents==1.0.0
 azure_ai_projects==1.0.0b11
 
-azure-core==1.34.0  # other versions might not compatible
+azure-core==1.38.0  # other versions might not compatible
 azure-core-tracing-opentelemetry
 azure-monitor-opentelemetry==1.6.9 # version such as 1.6.11 isn't compatible
 azure-search-documents