Changes the Sku of all disks connected to a VM to the desired one. Chaning the VMs role size might also be required.

Update-AzureVmDiskSku.ps1

param (
    [Parameter(Mandatory)]
    $ResourceGroupName,

    [Parameter(Mandatory)]
    $VmName,

    [Parameter(Mandatory)]
    [ValidateSet('Standard_LRS', 'Premium_LRS', 'StandardSSD_LRS', 'UltraSSD_LRS')]
    $StorageType,

    [Parameter(Mandatory)]
    $VmSize,

    [switch]$SkipVmSizeCheck,

    [switch]$StartVmAfterChange
)

function Get-AzureAvailableRoleSize
{
    param
    (
        [Parameter(Mandatory)]
        [string]$Location
    )

    if (-not (Get-AzContext -ErrorAction SilentlyContinue))
    {
        Connect-AzAccount | Out-Null
    }

    $azLocation = Get-AzLocation | Where-Object Location -eq $Location

    $availableRoleSizes = Get-AzComputeResourceSku | Where-Object {
        $_.ResourceType -eq 'virtualMachines' -and $_.Locations -contains $azLocation.Location -and $_.Restrictions.ReasonCode -notcontains 'NotAvailableForSubscription'
    } | Select-Object -ExpandProperty Name

    Get-AzVMSize -Location $Location | Where-Object -Property Name -in $availableRoleSizes
}

$resourceGroup = Get-AzResourceGroup -Name $ResourceGroupName -ErrorAction Stop

if (-not $SkipVmSizeCheck)
{
    $availableRoleSizes = AzureAvailableRoleSize -Location $resourceGroup.Location
    if ($VmSize -notin $availableRoleSizes.Name)
    {
        Write-Error "The role size '$VmSize' is not available in the location '$($resourceGroup.Location)'"
        return
    }
}

$vm = Get-AzVM -Name $VmName -resourceGroupName $ResourceGroupName -Status -ErrorAction Stop
if ($vm.Statuses | Where-Object Code -eq PowerState/deallocated)
{
    Write-Host "VM '$VmName' is already deallocated"
}
else
{
    Write-Host "VM '$VmName' is running, stopping and deallocating it."
    Stop-AzVM -ResourceGroupName $ResourceGroupName -Name $VmName -Force
}

$vm = Get-AzVM -Name $VmName -resourceGroupName $ResourceGroupName

# Change the VM size to a size that supports Premium storage
# Skip this step if converting storage from Premium to Standard
$vm.HardwareProfile.VmSize = $VmSize
if ($vm.HardwareProfile.VmSize -ne $VmSize)
{
    Write-Host "Changing VM size from '$($vm.HardwareProfile.VmSize)' to '$VmSize'."
    Update-AzVM -VM $vm -ResourceGroupName $ResourceGroupName | Out-Null
}
else
{
    Write-Host "VM does already have the desired size of '$($vm.HardwareProfile.VmSize)'."
}

# Get all disks in the resource group of the VM
$vmDisks = Get-AzDisk -ResourceGroupName $ResourceGroupName
Write-Host "Found $($vmDisks.Count) disks in the resource group '$ResourceGroupName'"

# For disks that belong to the selected VM, convert to Premium storage
foreach ($disk in $vmDisks)
{
    if ($disk.ManagedBy -eq $vm.Id)
    {
        if ($disk.Sku.Name -ne $StorageType)
        {
            Write-Host "`tUpdating disk '$($disk.UniqueId)' from '$($disk.Sku.Name)' to '$StorageType'."
            $disk.Sku = [Microsoft.Azure.Management.Compute.Models.DiskSku]::new($StorageType)
            $disk | Update-AzDisk | Out-Null
        }
        else
        {
            Write-Host "`tDisk '$($disk.UniqueId)' is already '$($disk.Sku.Name)'."
        }
    }
}

if ($StartVmAfterChange)
{
    Write-Host "Starting VM '$VmName'"
    Start-AzVM -ResourceGroupName $ResourceGroupName -Name $VmName
}

Write-Host "Finished updating VM '$VmName'"