Three things you could adjust in C:\Program Files\MIT App Inventor\extras\App_Inventor.avd\config.ini:
- Change disk.dataPartition.size to be something smaller like 100 MB. The data disk needs 2x the actual amount specified here because there is a base image then QEMU has a copy on write mirror.
- Change fastboot.forceColdBoot to yes and fastboot.forceFastBoot to no. This will prevent saving the RAM snapshot to memory on shutdown, which should save 1.5 GB or so.
- Adjust sdcard.size to be something smaller and/or set hw.sdCard to no.
You could also try adjusting hw.ramSize down but that may have unintended consequences.