Unable to get nested virtualization working with Hyper-V on an Azure VM

More test lab building….and more issues! This time I needed to build a Windows Server 2022 running Hyper-V hosted in Azure, the plan was to use this VM to host other VMs (known as nested virtualization). I provisioned a VM using one of the Azure VM SKUs that supports nested virtualization however when I attempted to install Hyper-V on the VM it failed with the following error “Hyper-V cannot be installed: The processor does not have the required virtualization capabilities“

After much troubleshooting, I eventually figured out what the problem was, when provisioning the VM I should have configured the Security type as Standard rather than Trusted launch virtual machines.

Re-creating the VM using this setting enabled me to install Hyper-V and enjoy some nested virtualization goodness 💪.