LG Group shares halve after Jensen Huang rally; margin investors suffer heavy losses

"I borrowed money to invest and ultimately sold at a 30 million won loss," one LG investor said.

LG Group shares, long dismissed as chronically undervalued before surging on what markets dubbed the "Jensen Huang effect," have collapsed just as swiftly, leaving retail investors nursing heavy losses.

LG CNS, which came close to two consecutive daily limit-up gains and briefly touched 160,000 won, has plunged to 92,800 won within a single week — roughly half its recent peak. LG Electronics, which climbed to 460,000 won on expectations of a partnership with Nvidia, tumbled to the 220,000 won range in just seven trading sessions, also losing about half its value. LG Innotek, which soared to 1.8 million won, has fallen to 1.03 million won, with the 1 million won threshold now in jeopardy.

The rally in LG affiliates was triggered by Nvidia CEO Jensen Huang's visit to South Korea and his meetings with LG executives, which fueled hopes of a deepening partnership. LG Electronics surged on expectations it would emerge as a "physical AI infrastructure company," while LG CNS drew buying on its positioning as a "robot transformation platform." The frenzy even swept up LG HelloVision, an unrelated affiliate that hit its daily limit-up with no clear connection to the Nvidia narrative.

The sudden spike in share prices drew a sharp increase in margin-financed buying, known locally as "debt investing." Margin financing carries the risk of forced liquidation — brokerages automatically sell pledged shares when collateral ratios fall below a set threshold — and analysts say that mechanism amplified the subsequent sell-off, driving prices down far more steeply than fundamentals alone would warrant.

LG Electronics was not alone. Other companies that had surged on Nvidia partnership hopes also failed to escape the recent sell-off. Naver, whose margin financing volumes briefly exceeded those of Samsung Electronics in June on the back of the Jensen Huang effect, saw its share price collapse to the 200,000 won level.

Despite the sharp declines, industry watchers remain broadly optimistic about LG's longer-term share price outlook, expecting the group to distinguish itself in AI and robotics by leveraging its accumulated research and development capabilities.

Citi Securities recently raised its target price for LG Electronics to 400,000 won — a 135 percent increase from its previous target of 170,000 won.

In a research note, Citi said LG Electronics is "shifting its business growth focus from home appliances to physical AI" and predicted the company would "effectively capture physical AI demand, underpinned by its leading R&D capabilities in AI and robotics."

LG CNS recently unveiled a physical AI platform called "PhysicalWorks," which integrates and manages the entire process of robot adoption — from training through to operations. Some market observers say the platform positions LG CNS as a prime beneficiary of the physical AI era.