LG Electronics Targets More AI Data Center Cooling Deals

LG Electronics is rapidly shifting its focus from traditional home appliances to artificial intelligence (AI) infrastructure, robotics solutions, and high-value-added businesses. Market analysts are adjusting their investment outlook accordingly, raising target prices for the stock and projecting significant profitability improvements.

In September, Daishin Securities increased its target price by 12.5% to 270,000 won (about $199) and maintained a "Buy" recommendation, while lowering its full-year operating profit forecast by 5.1%. The core of this transformation lies in the air conditioning and energy solutions (ES) business, which has secured approximately 600 billion won in AI data center cooling solutions orders in the first half of the year, with an additional 2-3 trillion won expected in the second half.

This high-value-added revenue is projected to begin reflecting in the second quarter of the next year, leading to an overall profitability improvement. LG Electronics has established a competitive advantage by creating a full cooling value chain, including cold plates, coolant distribution units, chillers, and external heat rejection systems.

The company's technology has been validated by receiving approval from Nvidia for its 2.5 MW-class coolant distribution unit to meet AI Factory standards. The robotics business is also emerging as a new growth pillar, with LG Electronics already selling actuators externally and bringing production in-house. The company is leveraging its data and software capabilities to expand its B2B scope, enhancing revenue visibility.

In the vehicle components segment, profitability is improving faster than top-line growth, with operating profit expected to surge 56.6% to 891 billion won this year. Despite external challenges, such as currency fluctuations and rising costs, improved product mix across businesses has helped defend profitability. As LG Electronics repositions itself as a long-term, order-backed B2B enterprise, analysts anticipate a shift in valuation frameworks to center on mobility and robotics solutions.