GM’s ability to balance profits, Trump politics pays off for investors
General Motors CEO Mary Barra at the annual Allen and Co. event held at Sun Valley Resort in Sun Valley, Idaho, on July 8, 2025. Attended the Sun Valley Media and Technology Conference.
David A. Grogan | CNBC
DETROIT — General Engines is proving to be a stellar tightrope walker when it comes to balancing profits, vehicle portfolio and political coups under the Trump administration.
The Detroit automaker’s 2025 results sent GM shares to a new record high on Tuesday, as the company beat earnings expectations and forecast an even better 2026, including a 20% increase in its dividend and a new $6 billion stock repurchase authority.
Such results are nothing new for GM, but Wall Street analysts say the company has attracted more investor interest than its peers due to the U.S. auto industry’s slowing sales, political turmoil and tariffs.
“GM offers strong execution, proven flexibility, high earnings quality (i.e. strong [free cash flow] A unique NA Truck Franchise with inventory stock reduction, capital allocation and much better fundamentals than traditional passenger car,” TD Cowen analyst Itay Michaeli wrote in an investor note Tuesday.
GM shares are up more than 70% in the past year; Several Wall Street analysts raised their price targets to record highs after earnings, including TD Cowen, which raised its target 10% to $122 per share on Tuesday.
GM is also increasingly ahead of its closest rivals in the US Ford Motor And Stellantis When it comes to earnings performance and capital application, according to many analysts.
“We rate GM Overweight for its best-in-class execution among North American-based auto OEMs, its consistent management team and strategy, and its strong product portfolio that delivers above-industry pricing and margins,” JPMorgan analyst Ryan Brinkman wrote in an investor note Tuesday.
Ford’s shares are up more than 35% in the past year, but its adjusted earnings forecast for this year is roughly half of what GM reported for 2025. Adjusted free cash flow expectations are also billions below what GM has been in recent years.
GM, Ford and Stellantis shares
The US-listed shares of Stellantis, which has gone through a major restructuring process, lost approximately 27% of their value last year. The company’s results have largely disappointed Wall Street recently, as it tries to focus on the US recovery.
GM’s 2025 results included net income attributable to shareholders of $2.7 billion, or earnings per share of $3.27; Adjusted earnings before interest and taxes $12.7 billion, or $10.60 per share; and adjusted automotive free cash flow was $10.6 billion.
hang on the rope
One of the things that set GM apart was its ability to navigate. Political uncertainty under US President Donald Trump.
The biggest challenge for the automotive industry as a whole is rising costs due to tariffs and inflation. GM estimates tariffs will cost it $3.5 billion in 2026, with inflation at $1.25 billion at the midpoints.
But GM plans to alleviate some of this. The automaker expects to offset those costs with $500 million to $750 million from regulatory savings under Trump policies, $1 billion to $1.5 billion in narrower EV losses from lower production, and billions of dollars in other benefits such as pricing and warranty expenses.
“Commodity and onshore headwinds for FY26 may be offset by regulatory benefits, warranty improvements, contraction of EV losses and lower tariffs resulting from USMCA negotiations,” RBC Capital analyst Tom Narayan said in an investor note on Tuesday.
GMC SUVs are parked outside a GMC Buick dealership in Edmonton, Alberta, Canada on March 22, 2025.
Arthur Widak | Nurfoto | Getty Images
More broadly, the automaker’s decline in EVs, including a $7.9 billion write-off last year, means it will continue to sell more profitable conventional vehicles with internal combustion engines.
And GM can now produce as many gas-guzzling vehicles as the company wants without the federal penalties eliminated by the Trump administration. Additionally, billions of dollars would be saved in purchasing credits to offset such penalties.
No matter what changes happen to the auto industry, GM’s success depends on its ability to adapt to new environments and the possibility of its vehicles, GM CFO Paul Jacobson said on a call with investors Tuesday.
“In the face of a rapidly evolving industry and significant macro challenges, the flexibility and adaptability of the GM team has been truly remarkable,” he said.
Cash is king
The GM’s balancing act is easier when he can fall on piles of cash if necessary. The company had more than $20 billion in cash through the end of last year, Jacobson said Tuesday, citing EBIT-adjusted earnings of $12.7 billion in 2025 and adjusted automotive free cash flow of $10.6 billion.
The Detroit automaker has managed to increase its average annual free cash flow generation from $3 billion to $10 billion over the last five years.
“This strong cash generation allows us to confidently execute on all pillars of our capital allocation framework,” Jacobson said. “Looking out to 2026 and 2027, we expect to invest between $10 billion and $12 billion annually, including approximately $5 billion to expand U.S. manufacturing capacity for some of the highest-demand vehicles and further reduce our tariff risk.”
This cash flow is in addition to $23 billion returning to shareholders through buybacks since November 2023. This helped boost the company’s stock price by eliminating about 35%, or more than 465 million, of its outstanding shares, which now stand at about 930 million.
GM was among the first major automakers to report fourth-quarter and 2025 earnings. His performance puts pressure on others to prove their ability to walk hard, too.
“We think it’s important to remember that this is a very different business from today’s GM of a decade ago, with a much more flexible earnings profile than is appreciated and a more balanced and pragmatic investment approach. GM appears on track to return to the same strong level of earnings achieved in recent years despite tariff costs in its cost structure,” Barclays analyst Dan Levy said in an investor note Wednesday. he said.
GM also stated that its costs and earnings continue to improve beyond 2026 as it continues to realign its product line, improve costs and move more production to the United States.
GM’s 2026 earnings guidance calls for net income attributable to shareholders of between $10.3 billion and $11.7 billion; adjusted earnings before interest and taxes $13 billion to $15 billion; and earnings per share between $11 and $13 per year.
