Missed Last Year’s Chip Rally, Up 300% This Year: How LG Electronics Is Riding Nvidia’s ‘Physical AI’ Express?

TradingKey - According to the latest Bloomberg report, LG Group Chairman Koo Kwang-mo will hold a high-level meeting with NVIDIA CEO Jensen Huang on June 5, focusing on deep cooperation in the field of physical AI.

Spurred by this news, LG Electronics' stock price hit the 30% daily price limit for two consecutive trading days, with a year-to-date gain exceeding 300% and its market capitalization reaching a record high.

The catalyst for this stock surge stems from rumors that Jensen Huang will visit Seoul after attending the Computex exhibition in Taipei. The market widely expects the meeting to yield breakthrough cooperation in embodied AI, covering cutting-edge sectors such as robotics, smart factories, smart mobility, and AI infrastructure construction.

This expectation not only ignited LG Electronics' share price but also drove a collective rally across LG Group subsidiaries, with LG CNS surging by up to 29% in a single day, LG Corp. climbing 26%, LG Innotek gaining 23%, and LG Uplus rising 17%.

Betting on Physical AI

LG Electronics' stellar performance actually reflects a major shift in global AI investment logic. After a spectacular rally in chip stocks, investors are actively seeking the AI industry's next inflection point. Segments like Physical AI, including robotics and autonomous driving, are becoming new magnets for capital due to their vast application prospects and commercialization potential.

While LG Electronics largely missed out on last year's chip-centric AI rally in South Korea, its share price has more than quadrupled since the beginning of this year. This turnaround is highly aligned with Jensen Huang's strategic push into the Physical AI business and reflects the market's strong expectations for the imminent dawn of the Physical AI era.

Shawn Oh, Head of Korea Cash Equities at NH Investment & Securities, stated in an interview that the meeting between Jensen Huang and Koo Kwang-mo will mark a significant milestone in Nvidia's expansion into the Physical AI landscape.

He predicted that the scope of cooperation between the two parties might not be limited to LG Electronics, but could extend to several LG subsidiaries, including LG Innotek and LG Uplus, forming a full-chain industrial collaboration covering AI infrastructure, smart hardware, and software services.

Meanwhile, Meritz Securities analyst Hwang Soo-wook believes that the significance of Jensen Huang's visit goes far beyond corporate-level cooperation; it is a major signal from Nvidia to the world that South Korea will play a core role in its global AI infrastructure expansion strategy. The market is currently repricing the AI industry, where the future focus of competition will no longer be mere AI service capabilities, but rather the prowess in building physical AI infrastructure.

LG and NVIDIA Upgrade Partnership

In fact, the collaboration between LG Group and NVIDIA did not emerge out of thin air; the two parties have previously engaged in deep cooperation across multiple fields.

In April this year, Jensen Huang's daughter, Madison Huang, paid a private visit to LG Electronics headquarters to meet with LG Electronics President Lyu Jae-cheol, where they conducted detailed discussions on application scenarios and cooperation models for physical AI technology.

Currently, LG Electronics has adopted NVIDIA's Omniverse platform for digital simulations in its smart factory construction, significantly enhancing production efficiency and quality control. LG Group's business footprint has long since expanded beyond traditional home appliance manufacturing into robotics, autonomous driving, and smart cities. NVIDIA's technological strengths in AI chips, algorithms, and platforms perfectly support LG Group's digital transformation.

NVIDIA's inclusion of South Korea in its global AI infrastructure expansion reflects profound strategic considerations. As a core hub of the global semiconductor industry, South Korea possesses robust technical expertise and a complete industrial chain in chip manufacturing and electronic device production.

The development of physical AI requires strong hardware manufacturing capabilities and supply chain support, making South Korea an ideal partner for NVIDIA to realize its physical AI strategy. Furthermore, the South Korean government has been actively promoting the AI industry in recent years, launching a series of supportive policies that have created a favorable environment for corporate collaboration.

This collaboration also represents a historic development opportunity for LG Group. Through deep cooperation with NVIDIA, LG can not only enhance its own technical prowess in AI but also leverage NVIDIA's global influence to accelerate its expansion into international markets. Particularly in physical AI fields such as robotics and smart factories, the partnership is expected to spawn a series of innovative products and solutions, driving LG's transformation from a traditional appliance manufacturer into a global AI technology giant.

In the long run, the arrival of the physical AI era is inevitable. As AI technology continues to advance, it is moving from the virtual world to the physical world, gradually acquiring the capabilities to perceive, decide, and act in real-world environments. This will profoundly change human production and lifestyles, bringing about massive industrial transformation and investment opportunities.