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Windows Server 2012 R2 Hyper-V introduced generation 2 VMs. Generation 1 VMs are still supported with all versions of Hyper-V.
Generation 2 VMs offer the following enhancements:
Generation 1 VMs are supported with all versions of Hyper-V. However, with Hyper-V 2016 and newer, the New Virtual Machine Wizard might default to generation 1. Create VMs as generation 2 as a best practice, if the guest operating system will support it.
For either generation of guest VM, if multiple disks require high I/O, each disk can be associated with its own virtual disk controller to maximize performance.
Microsoft does not provide a way to convert a generation 1 VM to generation 2. However, conversion might be possible if you choose to use a third-party tool (use at your own risk). The best-practice method is to migrate a workload from a generation 1 VM to a generation 2 VM. If you attempt a conversion with a third-party tool, do so in a test environment first to validate that the process works.