If you are facing slowness with Windows Server 2012 or 2016 VMs running on vSphere 6.5 build 5146846 or 5310538 then this article may come in handy. I am facing the same issue by the way and it seems that our issue is getting fixed, I will keep you all updated if it didn’t fully fix the issue.

The slowness comes from the storage side, you will find the VM slower than earlier.

Solution: VMware has released a bug fix for this issue in vSphere 6.5 update one release (released in 27th of July 2017), updating your ESXi hosts to that new release will be fixing your issue – OR – apply a work around also mentioned in the same article below.

VMWare KB article for the case:

https://recommender.vmware.com/solution/SOL-13898?src=vmw_so_vex_mrous_1194

VMware technical support team have confirmed to me that this update fixes the issue

The ESXi edition that causes the issue before the update:

The ESXi edition after applying update 1: