Depending on what server you use you may or may not update kernel. OpenVZ does not allow to update kernel from within VPS. DigitalOcean and some other VPS providers require that you change kernel from the control panel. So what kind of a server you use? Who is your provider?
Yes, you can't update kernel on VM inside it because all VMs works on hypervisor kernel, so you just can update hypervisor kernel and all VMs will receive it after whole server reboot. Note: you can UPDATE, but not UPGRADE(change) kernel.
If you rent a VPS server based on OVZ hypervisor you should contact your hosting provider for kernel upgrades. Or buy a KVM-based virtual server, which is more expensive, and where you can have almost any available kernel version.
If you have a bare-metal server where you run single or multiple virtual servers under OVZ hypervisor you should update kernel on the master node, i.e. bare-metal server.