Sims Doubles as Scrap Metal Meets an AI Data Centre Windfall
Fund managers say a fast-growing server recycling business is turning Sims into an unlikely but genuine AI capex beneficiary
10 Jul 2026 · 5 min read
In short
Sims' share price has roughly doubled over 12 months, driven partly by surging memory chip prices in its server recycling division.
FY26 EBIT guidance was upgraded 26% in March 2026 and a further 15% in June 2026, aided by both server recycling and traditional scrap metal.
Around 80% of Sims' economic operating revenue is generated outside Australia and New Zealand, Longwave Capital says.
Scrap metal recycler Sims has roughly doubled in value over 12 months as fund managers increasingly frame it as an unlikely but genuine way to play the AI data centre boom, through its fast-growing server and memory chip recycling business.
A traditional scrap steel business benefits from tariffs
Yarra Capital Management's October 2025 update laid out the original thesis: Sims' majority US exposure left it well placed to benefit from steel tariffs, with a strategy focused on margin over volume delivering solid results, and longer-term upside from scrap steel demand growing alongside lower-emissions electric arc furnace steelmaking. By January 2026, Yarra reported the stock outperforming further on rising US and Turkish scrap prices, a tailwind it expected to more than offset headwinds elsewhere in its portfolio.
A hidden AI capex exposure emerges
The more striking driver of returns came from an unexpected corner of the business. Perennial Partners' February 2026 update noted Sims benefiting from higher prices for computer chips recovered through its data centre recycling business, alongside stronger aluminium and copper pricing in its traditional operations. Pendal Group's March 2026 update quantified the scale of the shift: full-year EBIT guidance came in 26 per cent ahead of consensus, driven by surging prices for memory chips, DRAM and NAND, recovered through Sims' server recycling division, with earnings from that business quadrupling between FY25 and the current period.
Sims Limited (SGM, +10.9%) surged after providing a full-year trading update in which EBIT came in 26% ahead of consensus. The upgrade was driven by surging prices for the memory chips (DRAM and NAND) recovered through SGM's server recycling division, as well as strong scrap prices for steel, copper and aluminium in the US. Earnings from the server recycling business have quadrupled between FY25 and the current period.
— Pendal Group, Newsletter, March 2026
Riding the hyperscaler capex wave
Spheria Asset Management's April 2026 presentation described Sims Lifecycle Services, its data centre and IT asset recycling division, as riding the hyperscaler capex wave, with strong DRAM pricing supporting FY26 EBIT guidance of $165 million to $185 million. Maple-Brown Abbott's May 2026 update framed the position as an idiosyncratic way to play the AI capex boom, since hyperscalers refreshing data centre hardware at an accelerated pace were lifting the resale value of decommissioned servers and components flowing through Sims' recycling operations, even as the manager trimmed its position on signs memory pricing might be normalising.
A surprise upgrade confirms the traditional business is also firing
Pendal Group's June 2026 update reported a further surprise 15 per cent upgrade to FY26 EBIT guidance, this time driven by strength in the traditional scrap business, benefiting from a rally in aluminium scrap pricing and expanded ferrous scrap margins amid a strong US steel price environment, layered on top of the already strong server recycling earnings growth. Yarra Capital Management's own June update saw a pathway for the stock, which had broadly doubled over 12 months to around $29, to reach north of $35, supported by further catalysts still to come.
Sims would be one of those names for us heading into FY27. The stock has broadly doubled over the last 12 months, but we think there are further catalysts to come. The stock is now trading at about $29, we think there's a pathway to north of $35. The company just had an earnings update that is reasonably supportive of that thesis.
— Yarra Capital Management, Article, June 2026
A genuinely global business with a growing tech tilt
Longwave Capital's June 2026 update pointed out that Sims' shareholder exposure remains overwhelmingly global despite its ASX listing, particularly once its 50 per cent interest in US-based SA Recycling is included, with around 80 per cent of economic operating revenue generated outside Australia and New Zealand, and Sims Lifecycle Services revenue up around 70 per cent. NorthStar Impact Funds' July 2026 update framed the transformation succinctly, describing Sims as moving from a resource cyclical business to one that also includes tech exposure, giving the ASX rare indirect exposure to Taiwanese semiconductor pricing through its server recycling operations.
Questions
How is Sims exposed to the AI data centre boom?
Pendal Group and Maple-Brown Abbott said Sims' Lifecycle Services division recycles decommissioned data centre servers and memory chips, benefiting from surging DRAM and NAND prices as hyperscalers refresh hardware at an accelerated pace, quadrupling earnings from that business between FY25 and early FY26.
How much has Sims upgraded its earnings guidance?
Pendal Group reported Sims delivered a 26% EBIT upgrade in March 2026 driven by server recycling, followed by a further surprise 15% upgrade in June 2026 driven by strength in its traditional scrap metal business amid rising US steel and aluminium prices.
How global is Sims' revenue exposure?
Longwave Capital said approximately 80% of Sims' economic operating revenue is generated outside Australia and New Zealand, particularly once its 50% interest in US-based SA Recycling is included, making it a largely global business despite its ASX listing.
10 managers, 26 comments, with each manager's latest recorded position.
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