The market adage that "L-shaped stocks should not even be looked at" is breaking down. LG Electronics, tied to the humanoid theme, hit the daily upper limit again about a week after October 21, following news of a visit to Korea by Jensen Huang, the chief executive and founder of Nvidia. As expectations grew for cooperation between Nvidia and LG centered on physical artificial intelligence (AI), major affiliates including LG CNS and LG Innotek also surged in unison.
According to the Korea Exchange on Wednesday, LG Electronics closed at 293,000 won, up 29.93% from the previous trading day, hitting the daily upper limit. This is an all-time high on an adjusted-price basis. LG CNS also closed at the upper limit, trading at 113,800 won, up 29.91% from the previous day. Major affiliates posted gains together, including holding company LG (26.60%), LG Display (11.58%), LG Innotek (28.57%), and LG Uplus (7.03%).
The successive surge in LG affiliate share prices is interpreted as the result of expectations for cooperation with Nvidia being reflected in earnest. What the market is focusing on is whether cooperation will expand around the physical AI field through a meeting between CEO Huang and Chairman Kwang-mo Koo.
As LG Electronics has recently been strengthening its physical AI capabilities centered on future businesses such as robotics and smart factories, significant synergy is expected if it combines with Nvidia's AI platform. In addition, group-wide cooperation possibilities are being mentioned, including EXAONE, the generative AI model of the LG AI Research Institute, LG Innotek's semiconductor substrates and robot sensing technology, and LG Uplus's AI cloud business.
However, the burden from the short-term surge is also considerable. LG Electronics' closing price on this day far exceeded the target prices presented by securities firms. Based on major securities firm reports published recently, the highest target price for LG Electronics is around 230,000 won, but the share price on this day soared past 290,000 won. The rate of increase this year alone has also been steep. LG Electronics' share price rose about 220.5%, from 91,400 won on January 2, the first trading day of the year, to 293,000 won on this day.
LG Innotek is also at the center of recent expectations for AI benefits. LG Innotek is securing competitiveness in the high-value substrate business for AI semiconductors, raising long-term growth expectations. Among some investors, there is an assessment that the structural growth model that Samsung Electronics and SK hynix enjoyed in the memory semiconductor market can also be applied to LG Innotek. The analysis is that the AI semiconductor substrate business can establish itself as a new growth axis, while its existing core camera module business generates stable cash flow.
Expectations for LG CNS are also rising. The market expects future earnings to improve rapidly based on the expansion of the AI cloud business, overseas market entry, operation of its Global Delivery Center (GDC), and profitability improvement through its proprietary AI coding platform "AIND." At the "AX Fair" recently held by LG CNS, the company also unveiled AX solutions that presented the concept of utilizing AI like a new human resource in the corporate operation process.
If expectations for cooperation with Nvidia materialize, there is an analysis that the LG Group could be reassessed as a key player in the global AI ecosystem beyond its existing image as an electronics and components company. It is an opportunity to change the perception, which had become entrenched in the stock market as a "perennially undervalued stock."
The market forecasts that the growth of domestic AI and semiconductor-related companies, including LG, will continue as global AI investment continues to expand. Kim Jae-seung, a researcher at Hyundai Motor Securities, said, "KOSPI is being reassessed as a global growth stock as the monopolistic status of domestic semiconductor-related sectors is confirmed in the process of expanding global AI investment," adding, "The current AI bull market is not a situation led by startups with unclear profitability and cash flow, as during the dot-com bubble."
