To allow for customization of installation of software and update of system during the vm creation in azure, we can make use of the Custom Data and input the following information as shown below
#cloud config
package_upgrade: true
packages:
-nginx

Once the information has been input, please proceed with the vm creation as usual.

Give it some time and if all is good, the VM would be up and running and if you access the server via port 80 , you should be able to see nginx running as per below

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