Select the new “size” (being aware of that all so important column on far far right – you likely need to use the scroll bar – the price!
Click the RESIZE button at the bottom
Does A VM Need To Be Off To Resize It?
While you do not need to have a VM powered down or de-allocated to make the “size” change, it will reboot almost immediately after you press the button, so… yes, the VM needs to be off to make the change.
Can An Azure VM Be Reduced In Size CPU / RAM?
In a word, yes. Just follow the same process detailed above to expand the VM.