Can you share a screenshot of the Analysis --> Capacity Remaining tab? CPU Demand does not need to get to 100% or even above 80% (which is where your stress threshold seems to be set) to trigger the alert. A lot depends on 1) Are spikes and peaks accounted for, 2) What is the range in which it is looking at under Stress in the policy applied to the VM, and 3) how much buffer is set in the policy applied to the VM.
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