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+## Changes by Kind
+
+### Bug or Regression
+
+- Improves MachinePool scale up/down to avoid unnecessary VMSS VM model updates ([#5204](https://github.com/kubernetes-sigs/cluster-api-provider-azure/pull/5204), [@mweibel](https://github.com/mweibel))
+
+### Other (Cleanup or Flake)
+
+- Bump CAPI to v1.7.7 ([#5185](https://github.com/kubernetes-sigs/cluster-api-provider-azure/pull/5185), [@mboersma](https://github.com/mboersma))
+
+## Dependencies
+
+### Added
+_Nothing has changed._
+
+### Changed
+- sigs.k8s.io/cluster-api/test: v1.7.5 → v1.7.7
+- sigs.k8s.io/cluster-api: v1.7.5 → v1.7.7
+
+### Removed
+_Nothing has changed._
+
+## Details
+<!-- markdown-link-check-disable-next-line -->
+https://github.com/kubernetes-sigs/cluster-api-provider-azure/compare/v1.16.2...v1.16.3