The correct answer is D: Deploy virtual network gateways. To connect two virtual networks from separate subscriptions with distinct Azure AD tenants, you need to provision virtual network gateways in each virtual network. This involves setting up a secure tunnel using IPsec/IKE for communication between the VNets. Moving the VMs or VNets to different subscriptions is not necessary, and modifying the IP address space of VNet2 is also not required in this case because there is no overlap in the address spaces. Therefore, provisioning virtual network gateways is the initial step to achieve the connection.