Hello,
not every VM size in Azure allows nested virtualization.
Here is an answer with a good explanation and additional resources:
https://learn.microsoft.com/en-us/answers/questions/813416/how-do-i-know-what-size-azure-vm-supports-nested-v
Hyper-V Virtualization

Ibn Abbas Mohammed Elhadi Abbas Ahmed
0
Reputation points
Hi I was creating VM in Azure for Windows Server 2022 Azure edition. I need testing Hyper-v in it. When I was going to Mange> Add Roles and Features> Select Hyper-v, It was giving me this error. I
Azure Virtual Machines
Azure Virtual Machines
An Azure service that is used to provision Windows and Linux virtual machines.
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Windows for business Windows Client for IT Pros Storage high availability Virtualization and Hyper-V
Windows for business Windows Server User experience Other
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Rafael da Rocha 5,251 Reputation points
2024-01-13T03:56:12.19+00:00 -
kangupt-MSFT 20 Reputation points Microsoft Employee
2024-01-15T05:02:00.64+00:00 Hello IBNABBASMOHAMMEDELHADIABBASAHMED-9487,
Can you please confirm that the issue is resolved. Thanks
Kanika Gupta