While memory stocks soar globally, this ASX name is the local play

Sims Ltd (ASX: SGM) has traditionally been powered by ferrous and non-ferrous pricing environments (aluminium, copper and steel demand), but FY26 saw it add another cyclicality to the portfolio: memory. 

Memory is the story that has been driving stocks, including Nanya Technology Corp (TPE: 2408) in Taiwan's rally over 900% in the past twelve months, and newly listed CXMT Corp (SSE: 688825) in China closed its July 2026 debut up 466% (and consensus price target still sees 42% upside!). 

Sims has also had a strong share price reaction to the upgraded guidance given out by management and their positioning in the cyclical x cyclical sweet spot.

The Sims Lifecycle Services (SLS) division makes money on decommissioned IT hardware in two ways: harvesting and reselling working components (memory modules, SSDs, CPUs) into the secondary market, or shredding for materials.

2026 marked a perfect storm for memory pricing as the industry upgrade cycle from DDR4 to DDR5 saw a surge in pricing for DDR4, the commodity SLS was created to harvest and resell.

DDR4 is still used in legacy IT infrastructure, however, AI data centres use DDR5 (more capacity and efficiency). As such, we have seen large suppliers of DDR4 start to wind down supply as of 2025 and the effects on pricing surged through 2026.

SLS delivered underlying EBIT of $32.6 million in FY25. At the May trading update, management guided FY26 SLS EBIT to $170-175 million, against group underlying EBIT guidance of $350-400 million. At the half, SLS was already around 40% of group EBIT.

FY26 results land in the second half of August, so the above is still guidance rather than reported numbers.

The outlook for DDR4 and DDR5 pricing varies and is predicated on the dynamic between supply winding up, demand for DDR4 and DDR5, decommissioning rates and volume. All very difficult to keep on top of – but very few analysts on the ASX are well trained for this!

It seems like consensus is leaning towards a tight DDR4 market into 1H27 and a tight DDR5 market through to 2028. The CXMT listing in China talks to the positive sentiment around memory but is also a new supplier that could derail the 2027 memory pricing uptrend.

The AI capex growth and a compressing refresh cycle - which again has differing estimates, with some claiming the compression to 24 months whilst others call 5-6 years vs the current 7-8 year cycle - should result in increased volume and sustained pricing for memory for SLS.

Sims is moving into Ireland with a defined ramp of 4m GB in FY27 growing to 15m GB in FY29. Against the guided FY26 base of 65-70m GB sold, that's a new avenue for meaningful volume, and it puts SLS physically closer to European hyperscaler decommissioning.

For the legacy scrap business, the recent upgraded outlook was a result of the US domestic steel demand driven by US reshoring and industrialisation, which bodes well for the domestic steel production. Aluminium is increasingly seen as a strategic resource, and the consensus constructive view on copper will support the non-ferrous pricing environment.

All three cylinders are moving in the right direction.

Concentration risk for SLS is a concern, with revenue coming from a handful of hyperscaler decommissioning programs, and management has been explicit that the timing of those programs shifts volumes between reporting periods. TrendForce has 3Q26 DRAM contract price increases moderating to 13-18% QoQ, still tight, but the second derivative has turned.

The dispersion in consensus numbers is wide, and it should be - these aren’t legacy memory analysts, and memory is a difficult market to analyse. The stock is directionally moving close to Nanya Tech (2408 TT).

A rare opportunity on the ASX that is exposed to the cyclicality that is working, driven by onshoring, AI capex, memory upgrades, shortened refresh cycles, sustained copper and aluminium pricing. 

It won’t last forever, but make hay while the sun shines and the weather forecast is sunny, with intermittent periods of high winds!