It certainly might be something they could do, but we don’t have any proof that’s possible.
To be fair to Bostrom, his simulation argument outlines three possibilities but doesn’t tell us that the simulation hypothesis (#3) is actual.
Almost all civilizations go extinct before reaching technological maturity
Almost all advanced civilizations lose interest in creating simulations.
We are almost certainly living in a simulation.
Bostrom technically only argues that you can’t coherently reject all three. But, going farther, our computing power has increased dramatically in a miniscule amount of time. If you believe that aliens exist, then it isn’t too hard to suppose that some have vastly greater technological abilities than we have now. In that case, the idea that we’re living in a simulation isn’t something we can easily rule out.