LG Electronics (066570.KS) is shedding its “white goods” image and transforming into a “physical AI” solutions company, driven by its artificial intelligence (AI) and robotics businesses. As its comprehensive collaboration with Nvidia becomes more concrete, global investment banks (IBs) are successively raising their target prices significantly, reflecting rapidly building market expectations.
According to the electronics industry and foreign media, LG Electronics is increasingly being evaluated as a comprehensive technology company with three major growth pillars: industrial and home robotics, AI data center cooling solutions, and vehicle component solutions (VS), moving beyond its traditional identity as an appliance-dependent manufacturer. In particular, its collaboration with Nvidia is expanding beyond simple component supply to encompass the construction of a next-generation physical AI ecosystem, spanning AI model development, robot learning and operation, and digital twin implementation.
Big Tech Collaboration Takes Shape… Group-Level AI Alliance
The collaboration between LG Electronics and Nvidia has gained momentum following meetings between top executives. In April, LG Electronics’ management discussed physical AI cooperation plans with Madison Huang, Senior Director at Nvidia and eldest daughter of CEO Jensen Huang, who oversees the robotics business. Earlier this month, CEO Jensen Huang personally met with LG Group Chairman Koo Kwang-mo. After what has been dubbed the “Samgyeopsal-Soju meeting” near Hongik University Station in Seoul, the two met again at the Twin Towers in Yeouido to solidify their AI alliance.
The results of their technical collaboration are also becoming visible. LG Electronics’ home robot “Cloid” is equipped with Nvidia’s robotics-specific chipset “Jetson Thor” and has reportedly undergone advanced training through the virtual simulation platform “Isaac.” This is considered a prime example of combining Nvidia’s AI platform with LG Electronics’ hardware manufacturing capabilities.
On the 1st of this month, LG Electronics carried out an organizational restructuring by establishing a CEO-level “Robotics Business Center.” The newly established center is a complete organization encompassing business development, sales, and operations functions, with a dedicated “Data Factory” department for robot learning placed under it. This is interpreted as a strategic commitment to make the physical AI-based robotics business a future core growth engine.
Group-level cooperation is also expanding. An LG working group composed of LG Electronics, LG Innotek, LG CNS, and the LG AI Research Institute recently visited Nvidia’s headquarters in Santa Clara, California, for working-level discussions. Ryu Jae-cheol, President and CEO of LG Electronics, stated on his LinkedIn, “We further specified the scope of cooperation and strategic partnership opportunities,” adding, “The core is collaboration on robot form factors, which can become representative devices of physical AI.”
President Ryu continued, “Beyond robots, we are discussing a wide range of synergies, including the advancement of LG Data Factory and AI data center cooling solutions, as well as LG’s mass production systems for robots,” adding, “We are accelerating preparations for the future of the physical AI ecosystem.”
‘Real-World Data’ as a Weapon… Business Expansion into Robotics and Cooling Solutions
The background to LG Electronics’ differentiated competitiveness in the physical AI market lies in its vast trove of “real-world data.” President Ryu explained, “We have collected extensive usage data through our diverse ThinQ smart home platform portfolio,” and “we also have access to detailed manufacturing data from 31 production facilities across 14 countries worldwide.” This is evaluated as an essential asset for robot learning and AI model advancement.
The robotics business is taking shape centered around actuators. Actuators are core components that realize robot joints and movement, and LG Electronics is entering this market based on its manufacturing capabilities, having produced tens of millions of motors annually. Eugene Investment & Securities analyzed, “LG Electronics’ robot component business is expected to proceed centered around actuators,” adding, “A pilot line is currently being built in Changwon, with plans to apply them first to its own commercial robots within the year.”
Entry into the AI data center cooling solutions market is also gaining traction. According to Hana Securities, qualification testing for chillers targeting North American hyperscaler customers is in its final stages, with revenue contribution expected to begin within 6 to 9 months after final testing is completed. Leveraging its accumulated technical expertise in the heating, ventilation, and air conditioning (HVAC) business, LG Electronics aims to expand orders for AI data center chillers.
Record Earnings and Surging Stock Price… Securities Firms Raise Targets En Masse
LG Electronics’ performance is lending weight to this business transformation. The company’s preliminary consolidated second-quarter revenue was 23.83 trillion won (approximately $15.8 billion), with operating profit of 1.58 trillion won (approximately $1.0 billion), representing year-on-year increases of 14.9% and 146.9%, respectively. Both revenue and operating profit are record highs for a second quarter. On a first-half basis, revenue reached 47.56 trillion won (approximately $31.6 billion) and operating profit 3.25 trillion won (approximately $2.2 billion), with first-half operating profit alone surpassing last year’s full-year operating profit (2.48 trillion won).
Strong earnings combined with physical AI expectations have driven a steep rise in the stock price. LG Electronics’ share price, which hovered in the 100,000 won range at the beginning of this year, surged to the 400,000 won (approximately $265.50) level earlier this month. It has since partially declined due to increased market volatility but remains in the 200,000 won (approximately $132.75) range.
Domestic and international securities firms have sharply raised their target prices for LG Electronics. Citigroup raised its target price by 135% from 170,000 won (approximately $112.84) to 400,000 won (approximately $265.50), while Bank of America (BofA) also raised its target to 350,000 won (approximately $232.31). Kyobo Securities similarly increased its target by 94% from 180,000 won (approximately $119.48) to 350,000 won (approximately $232.31).
Choi Bo-young, an analyst at Kyobo Securities, explained, “In the past, LG Electronics was perceived only as an appliance-centric company, but it now needs to be re-evaluated as a growth stock expanding its AI data center cooling solutions and robotics businesses targeting North American big tech.” Citigroup analyzed in its report, “Given that robots are a precision industry combining drive units, control, and sensors, the manufacturing capabilities built from producing tens of millions of motors annually can most effectively absorb physical AI demand.”
New Businesses to Ramp Up in Second Half… Expanding AI Infrastructure Investment
LG Electronics expects its B2B new businesses, including AI data center cooling solutions and robotics, to gain full momentum from the second half of the year. The company plans to continue investing in AI data center cooling solutions within its HVAC business, while also expanding its component solutions from existing parts like compressors and motors in its home appliance business to include robot actuators.
In the home robot sector, the company is reportedly reviewing strengthening software connectivity with home appliances, robot-friendly product design, and the potential introduction of subscription-based models.
In its recent investment plans for South Korea’s Yeongnam region, LG Group also presented strengthening AI data center infrastructure and physical AI-related manufacturing capabilities as key pillars. LG Electronics plans to strengthen its HVAC R&D capabilities centered in Changwon to respond to the proliferation of AI data centers, while continuing to advance its home appliance manufacturing competitiveness and develop AI-based products and production technologies.
President Ryu Jae-cheol emphasized, “By combining Nvidia’s AI platform with LG Electronics’ unique robotics technology, we are laying the foundation for a next-generation physical AI ecosystem,” underscoring that LG Electronics is leaping beyond being a simple appliance maker to become a core pillar of the global physical AI ecosystem.