ESXi on Azure VM

Hi Omar,

To answer your main question directly: No, it is not officially supported, and in practical terms, running ESXi as a nested hypervisor inside a Windows Hyper-V VM on Azure will not work.

Here is why you are getting stuck: While Azure VMs (like your Standard F4ams v6) absolutely support nested virtualization, Microsoft engineered this feature specifically to run Hyper-V inside Hyper-V (for Windows or Linux guest VMs).

VMware ESXi has incredibly strict hardware and CPU instruction requirements. It requires direct, low-level access to virtualization extensions (VT-x/AMD-V), specific hardware timers, and memory management units. Even though you correctly enabled ExposeVirtualizationExtensions in Hyper-V, the virtualized hardware presented by Azure's host > to your Windows Server > to Hyper-V > to ESXi lacks the exact hardware hooks the ESXi kernel needs to initialize. This is the exact reason it hangs indefinitely at the "Relocating module and starting up the kernel" step.

What are your alternatives?

Azure VMware Solution (AVS): If you need to run enterprise VMware workloads in Azure, Microsoft offers this service. It provides actual, dedicated bare-metal servers running VMware in Azure datacenters, bypassing nested virtualization entirely.

Local Labs: If you are just trying to build a learning lab, you will save yourself a lot of time by using a local physical PC with VMware Workstation, or a local bare-metal machine running ESXi, where nested VT-x features can be passed through natively.

It's a great experiment, but unfortunately, the Azure hypervisor abstraction layer just won't let ESXi boot!