Factories that can predict their own failures. Supply chains tested in virtual worlds before real-world disruptions hit. Entire industrial systems optimized before a single dollar is spent. That’s what digital twin technology is making possible.
As artificial intelligence advances, companies are using digital replicas of physical assets to simulate, test and improve performance across manufacturing, logistics and infrastructure.
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“AI is finally reaching a point where it can be deployed into the real economy,” says Tejas Dessai, director of thematic research at Global X ETFs. “We are at the beginning of a long cycle where AI, simulation, software and automation start to reshape physical and heavy industries.”
For investors, that shift is opening the door to a new class of opportunities. But as with any new investment theme, investing in digital twin technology and industrial automation requires a thoughtful, well-structured approach.
If you want to invest in this space, you can do so through individual stocks like Nvidia Corp. (ticker: NVDA) and Siemens (OTC: SIEGY) or opt for diversified exposure through exchange-traded funds like the iShares A.I. Innovation and Tech Active ETF (BAI) or Global X Robotics & Artificial Intelligence ETF (BOTZ). Each approach has its pros and cons, so here’s what to know about digital twins to help you choose the right investment approach for you:
— What is digital twin technology?
— Why invest in digital twin technology and industrial automation?
— Best ways to invest in digital twins and industrial automation.
— Key considerations before investing.
What Is Digital Twin Technology?
To invest wisely in digital twin technology, you need to understand what it is. Put simply, digital twins are virtual replicas of physical objects, processes, systems or even people. They can be continuously updated with real-world data, allowing companies to simulate how the actual objects or systems will perform under different conditions.
In practice, this means a manufacturer can model a product line to identify bottlenecks, an energy company can simulate grid performance during peak demand, or a logistics firm can test routing strategies before disruptions occur.
“Digital twins sit at the center of that physical AI cycle because they allow companies to model, test and optimize real-world systems before making decisions in the field,” Dessai says. “If AI is the brain, digital twins are the training ground for the physical world.”
Dessai sees “tremendous growth for both areas as use cases develop and the tech matures.”
Why Invest in Digital Twin Technology and Industrial Automation
One of the primary reasons investors are paying attention to digital twin technology and industrial automation is the sheer scale of expected growth in the area. The digital twin market is expected to grow at a compound annual growth rate, or CAGR, of nearly 48% between 2025 and 2030, according to global market research firm Markets and Markets. Numerically, that means expanding from $21 billion in 2025 to nearly $150 billion by 2030.
Industrial automation is also already seeing real-world adoption. Over 540,000 industrial robots were installed globally in 2024 alone, according to the International Federation of Robotics’ World Robotics 2025 report. While annual installations remained steady near record highs, global units in operational use surged by 9% from the previous year to reach over 4.6 million, according to IFR President Takayuki Ito.
“In addition to innovation, a favorable policy backdrop is becoming an important driver for the industrial automation theme,” Dessai says. “Reshoring initiatives are pulling significant capital into domestic manufacturing, and new factory buildouts, especially in strategic industries, are being designed with automation in mind from day one.”
This is creating a “powerful tailwind for the theme that goes beyond technology alone,” he says.
Finally, digital twins sit at the intersection of several powerful megatrends, including artificial intelligence, 3D modeling, sensors and industrial automation, says Jay Jacobs, U.S. head of equity ETFs at BlackRock. As adoption continues and more use cases arise, this combination provides a compelling investment thesis for digital twins and industrial automation. The question is how best to act on that thesis.
[Read: 6 Top Small-Cap AI Stocks and Emerging AI Companies]
Best Ways to Invest in Digital Twins and Industrial Automation
There are two main ways to invest in digital twin technology: through individual companies tied to the theme or through ETFs that bundle many of these companies together. Which way is better depends on how hands-on you want to be and your appetite for risk.
If you like to pick stocks for your portfolio, you can tap into the growth potential of digital twins through companies either using the technology or enabling it. On the usage side are industrial and automation leaders like Siemens and Rockwell Automation Inc. (ROK) or software-focused players like Dassault Systèmes (OTC: DASTY) and PTC Inc. (PTC). On the enabler side are companies like Nvidia, which provide the computing power behind AI and simulation platforms. For instance, Dassault Systèmes uses Nvidia’s open-source AI models to power its digital twin simulations.
The challenge with cherry-picking stocks is knowing which ones are cherries and which are just the pits. You’ll need to do considerable research and stay up to date on the rapidly evolving technological landscape.
“Picking an individual stock may offer targeted exposure to digital twin technology, but also introduce significant company-specific risks,” Jacobs says. “We believe most investors will be better served by gaining more diversified exposure to a specific related theme like a basket of AI-related companies, or taking a multi-theme approach that offers exposure to AI and robotics among other technologies.”
ETFs like BAI or the iShares Future AI & Tech ETF (ARTY) let you spread your bet across dozens of AI companies. Or you can lean into the robotics angle a bit more with the iShares Future Exponential Technologies ETF (XT) or BOTZ.
“That gives investors access to global leaders across robotics, industrial automation and enabling technologies without taking concentrated company-specific risk,” Dessai says.
You will need to pay a fee through the fund expense ratio, but in return you get professional management and diversification. Often, these are well worth the price, especially when investing in a new theme like digital twins and industrial automation.
Key Considerations Before Investing
As compelling as this investment theme is, it’s not without nuance. Digital twin technology and industrial automation are a type of thematic investing, an approach which focuses on long-term trends rather than traditional sectors.
“Themes play an important role in identifying the risk and opportunities in the markets today,” Jacobs says. “Increasingly we see thematic investing replacing sector-based investing, offering a more precise way of capturing mega forces like AI, geopolitical fragmentation and demographic shifts.”
In other words, you’re not just investing in one industry; you’re investing in a trend that cuts across many of them.
This is why diversification and time horizon are especially important. “Changing sentiment and macro developments may impact short-term returns, which investors can help mitigate by taking a longer-term view of thematic opportunities,” Jacobs says.
Ultimately, digital twin technology and industrial automation represent a long-term shift rather than a short-term trade. For investors, the key is finding a thoughtful way to gain exposure while staying diversified and focused on the bigger picture.
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How to Invest in Digital Twin Technology and Industrial Automation originally appeared on usnews.com