Elastic search cluster on Kubernetes Cluster vs VM

I would be more inclined to the second solution. It has many advantages over the first one however it may seem more complex as it comes to the initial setup. You can actually ask similar question when it comes to migrate any other type of workload to Kubernetes. It has many advantages over VM. To name just a few:

1. self-healing cluster,
2. service discovery and integrated load balancing,
3. Such solution is much easier to scale (HPA) in comparison with VMs,
4. Storage orchestration. Kubernetes allows you to automatically mount a storage system of your choice, such as local storage, public cloud providers, and many more including Dynamic Volume Provisioning mechanism.

All the above points could be easily applied to any other workload and may bee seen as Kubernetes advantages in general so let's look why to use it for implementing Elastic Stack:

5. It looks like Elastic is actively promoting use of Kubernetes on their website. See also this article.
6. They also provide an official elasticsearch helm chart so it is already quite well supported by Elastic.

Probably there are many other reasons in favour of Kubernetes solution I didn't mention here. Here you can find a hands-on article about setting up Highly Available and Scalable Elasticsearch on Kubernetes.