LG Electronics reported preliminary third-quarter earnings that fell far short of market expectations, sending its shares sharply lower; nevertheless, profitability continued to improve, and the South Korean consumer electronics giant remains on a recovery track for the year overall.

Despite the weaker-than-expected performance, LG is actively positioning itself in high-growth areas of the AI era, including data center cooling systems and robotics, while striving to keep core businesses such as home appliances growing.

LG said on Wednesday that geopolitical instability and macroeconomic volatility are weighing on its operations. Analysts believe that, amid conflicts in the Middle East and Europe, the stronger Korean won and elevated shipping costs are creating widespread operating difficulties for South Korean exporters.

Although external uncertainties persist, LG said its home appliance, auto parts, and television businesses remained profitable in the quarter; company-wide cost-cutting measures also partially offset higher logistics, raw material, and fixed costs.

The company forecast that operating profit for the third quarter ending in September rose 13.5% year on year to 781.8 billion won (US$584.4 million); revenue is expected to grow 8.9% year on year to 23.827 trillion won.

On a sequential basis, however, operating profit is likely to fall 50.5%, with revenue roughly flat. Both core figures fell short of market expectations.

A FactSet-compiled consensus showed analysts had expected operating profit to climb further to 1.028 trillion won in the quarter.

After the preliminary results were released, LG Electronics shares plunged more than 9%, giving back much of their gains for the year. Still, thanks to the company's push into AI and new businesses, the stock has more than doubled so far this year.

On new business expansion, LG Electronics earlier this week secured a multi-year contract to supply cooling systems for U.S. AI data centers. Under the agreement with AIR Control Concepts, a Virginia-based data center platform services provider, LG will supply chillers for AI data centers with total installed capacity exceeding 5 gigawatts.

To meet rising demand for chillers from U.S. AI data centers, LG plans to build a new plant in Virginia, expected to begin production in the first half of 2027; it will also expand capacity at its existing plants in South Korea.

LG said annual new contract value for data center cooling solutions could reach several billion dollars by the end of 2026; the business already won US$426 million in orders in the first half. The company expects to achieve its US$680 million revenue target for the chiller business in 2027 ahead of schedule.

In addition, LG is deepening cooperation with U.S. tech giant Nvidia in the field of embodied AI. The group's parent, LG Group, said in August that the two sides are jointly developing a humanoid robot, with the product planned for launch in the first quarter of 2027.

This next-generation bipedal humanoid robot will be equipped with Nvidia's Isaac GR00T foundation model and the Jetson Thor computing platform. LG Group subsidiaries including LG Electronics, LG Innotek, and LG Energy Solution will supply actuators, sensors, and battery components for the robot.