That is not necessarily always going to be the case... For instance, in looking at some stuff, I see that I can build a NAS with 16TB usable cheaper than I can build a NAS with 12 TB usable.
but no one would accuse you of overbuilding in that case.
If you put in a server with 96GB of RAM when you had 1 VM using 4GB, that's over building. If you needed to add more VMs later, adding RAM would be cheaper down the line, or it might be time to get a new server.