Of course they can! They can implement interfaces, which are sealed. In fact, that's one of their most common usages:

    sealed interface Option { 
        record InputFile(Path path) implements Option {}
        record OutputFile(Path path) implements Option {}
        record MaxLines(int maxLines) implements Option {}
        record PrintLineNumbers() implements Option {}
    }

(see https://www.infoq.com/articles/data-oriented-programming-jav...)

The problem of extending classes is that it can introduce hidden state and also result in non-reflexive equality. But interfaces are fine.