It will even download the Windows 11 VHDX for you:

Parallels goes out of its way to show Windows front-and-center, even though Microsoft barely supports this with a VHDX disk image of the latest ARM64 Windows 11 Insider Preview build. Next, you get a choice of OSes to install. As there can be a lot of confusion around what you can (ARM64) and can’t (Intel) emulate on an M1 Mac, Parallels needs to start with a screenful of information: You typically start off with a virtualization solution by creating a VM, so let’s start there. So what’s the difference? Let’s do a quick comparison. VMware then later released a tech preview for their own VMware Fusion software (free while in preview). Initially, the only option for running virtual machines on M1 Macs was Parallels Desktop, so that’s where I started. (You might think the first VM was a Windows VM, but that’s not the case, the first was a Fedora 34 Linux installation. Not surprisingly, the first thing I wanted to do on it was to run virtual machines. I have a Mac Mini with the original ARM-based M1 chip.

Oh, and you can generate your own Windows 11 ARM64 ISOs now too, just like Parallels does. Also see this post that clarifies Microsoft’s licensing for Windows for ARM64. : Feel free to read through this post and then check out the new follow-up post that compares the latest versions of Parallels and VMware Fusion.

Vmware fusion for m1 mac