Azure Linux support has been added recently [1], and so is available for self-hosted Karpenter (you can specify "imageFamily: AzureLinux" in AKSNodeClass), will be rolled out for the managed experience (Node Auto Provisioning) soon.

[1] https://github.com/Azure/karpenter-provider-azure/pull/72

(source: On the team that is developing the provider)

Awesome, thank you.