Three Digital Engineering Stocks to Watch

“Digital engineering” denotes the use of software to design, test, manufacture and manage physical products and infrastructure before – and, increasingly, instead of – doing anything in the physical world. 

It encompasses such techniques as digital twins, computer-aided design (CAD), computer-aided engineering and simulation, product lifecycle management (PLM), manufacturing software and related data-management tools.

The basic idea is to create a digital representation of a product, then use software to model how it will behave. An engineer designing an aircraft component, for example, can create a 3D model, simulate stresses and airflow, modify the design and test it again without producing multiple physical prototypes. Once a product is manufactured, the same digital model can be connected to real-world data, creating a digital twin that can be monitored and optimised throughout its operating life.

That makes digital engineering increasingly important as companies seek to develop products faster, reduce prototyping and manufacturing costs, and squeeze more productivity from increasingly complex engineering processes. Artificial intelligence (AI) is adding another layer.

The market is sizeable, although estimates vary considerably depending on what analysts include. Fortune Business Insights estimates the global engineering software market will be worth $58.4bn in 2026, rising to $120.7bn by 2034. Mordor Intelligence is more bullish, forecasting the market will grow from $58.7bn in 2026 to $147.3bn by 2031.

The individual components are substantial markets in their own right. Product lifecycle management is forecast to grow from $36.6bn in 2026 to $58.5bn by 2031, while the digital twin market could reach $149.8bn by 2030, according to MarketsandMarkets.

For investors, the attraction is therefore less about a single software category and more about the emergence of a digital layer connecting the design, production and operation of physical assets. The opportunity could expand further as AI makes these tools faster, more automated and accessible to a wider pool of engineers.

This analysis will outline the business case for three stocks at the forefront of this dynamic theme: PTC [PTC], Autodesk [ADSK] and Hexagon [HXGBF].

PTC: The PLM specialist

PTC enters the second half of 2026 with momentum building around its core PLM franchise. In its latest results, covering the third fiscal quarter ended 30 June, revenue was $600m, while annual recurring revenue (ARR) excluding divested businesses rose 9.1% in constant-currency terms to $2.45bn, beating the top end of guidance. Operating and free cash flow also exceeded expectations. Management subsequently raised its full-year guidance for ARR, revenue and EPS, while maintaining its cash-flow outlook.

The strategic story is increasingly centred on what PTC calls its Intelligent Product Lifecycle vision. The company argues that manufacturers need to modernise the underlying product data held in CAD, PLM, application lifecycle management and service lifecycle management systems before they can extract meaningful value from AI. That gives PTC an interesting position in the emerging industrial AI stack: rather than competing to build foundation models, it supplies the software and structured data on which AI-enabled engineering workflows can operate.

For investors, the improving recurring-revenue profile is arguably more important than headline quarterly revenue, which fell 7% year-on-year partly because of the divestiture of Kepware and ThingWorx. PTC also repurchased roughly $525m of stock during the quarter and now expects to buy back about $1.625bn during fiscal 2026.

Autodesk: The platform play

Autodesk’s Q2 2027 results are due on 27 August. The company’s Q1 results, reported in May, were strong: non-GAAP EPS rose 31% y/y to $2.99, while revenue increased 18% to $1.93bn. Management also guided for Q2 revenue of $2.005bn-2.015bn and non-GAAP EPS of $3.10-3.14.

The bigger story, however, is Autodesk’s attempt to expand beyond its traditional design software franchise. In May, it agreed to acquire MaintainX for approximately $3.6bn, giving it a foothold in maintenance and operational workflows. MaintainX is expected to generate more than $135m of ARR in calendar 2026, growing at more than 50%. The strategic attraction is the data generated once physical assets move from the design stage into operation: Autodesk wants to connect design, manufacturing and maintenance, creating a larger platform on which AI can be deployed.

That makes the August earnings release particularly relevant. Investors will be looking for evidence that underlying subscription growth remains healthy, while also assessing whether the MaintainX deal can justify its price and extend Autodesk’s addressable market. The opportunity is appealing, but expectations are already high.

Hexagon: The physical-world play

Sweden’s Hexagon offers the most direct exposure of the three to the connection between digital engineering and the physical world. Its portfolio spans precision measurement, manufacturing intelligence, geospatial technology and autonomous solutions, providing the sensors, software and data required to turn physical assets into increasingly sophisticated digital representations.

Its latest results, for the quarter ended 30 June, underline the strength of that proposition. Operating sales reached €1.05bn, with organic growth of 12%, while EBITA increased and the margin reached 24.3%. Cash conversion was particularly strong at 149%, while recurring revenue grew organically by 4%. Manufacturing Intelligence was a standout, with 13% growth and a 380-basis-point improvement in its margin.

There is also a sizeable structural opportunity. Hexagon estimates that its serviceable addressable market will expand from €27bn to €38bn by 2030, driven partly by labour shortages and the shift towards autonomous systems. The company is targeting 4-6% average annual organic revenue growth and EBITA margins of 24-26% through 2030.

For investors, Hexagon therefore provides a different proposition from pure engineering software: it combines software and recurring revenues with hardware, sensors and measurement technology. That can make the business more exposed to industrial cycles, but it also gives Hexagon a potentially valuable position as factories, construction sites and other physical environments become increasingly automated and data-driven.

Conclusion: The investment case for digital engineering stocks

This is how the three firms currently compare in terms of fundamentals. 

Source: Yahoo Finance

Digital engineering offers investors exposure to the long-term digitisation of the physical economy, as manufacturers and other asset-intensive businesses increasingly use software to design and manage products. AI could extend the opportunity by automating parts of the engineering process, although the technology remains some way from replacing human expertise in complex applications. 

For investors, the three stocks offer distinct routes into the theme. PTC stock looks the most directly geared to recurring industrial software revenue, with Q3 ARR growth of 9.1% in constant-currency terms and management raising its full-year outlook. 

ADSK stock offers the broadest design and construction ecosystem, while its pending MaintainX acquisition could extend the platform into asset operations. Its next earnings release on 27 August will provide a fresh test of growth momentum. 

Lastly, HXGBF stock provides the most differentiated exposure, combining software with sensors, measurement and industrial automation. Together, they offer investors three complementary ways to play the same structural shift: PTC through PLM, Autodesk through design software and Hexagon through the digitisation of the physical world.

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