This is a bit overkill although it depends a lot on what you will use your VMs for.
I would make sure you set a TDP limit for the CPU. Some board makers totally disregard Intel guide lines and allow the CPU to pull like 200W+ continuously at full load. Limiting it to ~120W will not cost you a lot of performance but might save some power.
650W is total overkill unless you add a ton more drives. Gold PSUs are not rated below 10% load. Here they can drop to 50% or less meaning a gold 650W might consume more than a Bronce 350W unit.
I am personally not a big fan of ITX builds. You can only add a single PCIe card. And you might want to add an HBA, NIC, GPU (for transcoding), NVMe SSDs, or something else down the line. With an ITX board you can only add one. And this PC is not small anyways.