Sims Limited: From Scrap to Silicon
Sims Limited's FY26 results mark a decisive strategic pivot. Underlying EBIT surged nearly 170% to $468 million, and return on invested capital reached 11.7% — comfortably above the cost of capital. The catalyst? A reimagining of the company as a critical player in the AI infrastructure lifecycle, with its Sustainable IT Solutions (SLS) business now a growth engine alongside the traditional metals recycling operations.
The Data Center Goldmine
The narrative is best captured by the refresh cycle in memory technologies. As manufacturers pivot to DDR5, production of DDR4 has collapsed, creating an acute scarcity. Warrick Ranson, CFO, highlighted the scale:
This dynamic has made SLS's decommissioning and repurposing services extraordinarily profitable, with the unit economics of selling used DDR4 modules turning into a windfall.Prices for new DDR4 memory continued to increase exponentially, with our market reference price finishing the year over 1,000% above the prior year...
The company has positioned itself as the go-to partner for hyperscalers seeking to extract value from aging infrastructure. Stephen Mikkelsen, CEO, emphasized the strategic moat: “We are well prepared to capture these opportunities. We have strong global and embedded relationships.” — Stephen Mikkelsen, Chief Executive Officer · 2026-08-17 The AI infrastructure buildout is not just about new capacity; it's about the circular economy of compute.
Non-Ferrous Tailwinds
Beyond memory, the company is benefiting from the same AI-driven demand in its metals business. Copper and aluminum prices have surged, driven by data center construction and electrification. The company's US operations, particularly SA Recycling, have leveraged this with a focus on zorba — a byproduct of shredding that has become a high-margin product. The non ferrous pricing strength is expected to continue, underpinning the FY27 outlook.
The Road Ahead: GPUs and DDR5
Looking forward, Sims is already preparing for the next wave. The company has commenced R&D to test and certify GPUs, which are far more complex and valuable than current memory modules. Stephen was clear about the opportunity: “I see GPUs as a bigger opportunity than DDR4s for a couple of reasons.” — Stephen Mikkelsen, Chief Executive Officer · 2026-08-17 The sheer volume of AI infrastructure coming online will require massive decommissioning, and Sims intends to capture that.
However, near-term variability remains. Decommissioning schedules are being pushed out due to data center bottlenecks, particularly around electrical connections. As Stephen put it, “There is a hell of a lot more DDR4s sitting out in the data center land than what's been repurposed to-date.” — Stephen Mikkelsen, Chief Executive Officer · 2026-08-17 This is a timing issue, not a demand issue.
Prior calls laid the groundwork for this pivot. In February, Ingrid Sinclair noted the lag in price transmission: “We're normally a month or 2 months out from what you see in the price increasing.” — Ingrid Sinclair, Head of SLS or Senior Executive in SLS division · 2026-02-17 And Stephen highlighted the structural imbalance: “So you've got this demand, which is strong. But what you have is this falling dramatically falling supply...” — Stephen Mikkelsen, CEO · 2026-02-17 These themes have now come to fruition.
Sims Limited's transformation from a traditional scrap recycler to a key enabler of the AI economy is a compelling story. With the medium-term growth drivers intact — DDR4 demand extending beyond 2028, DDR5 and GPU repurposing on the horizon — the company is positioning itself for sustained earnings growth. The market hasn't fully re-rated the stock for this pivot, but the fundamentals are undeniably shifting.