GM’s ability to balance profits, Trump politics benefits investors

Detroit — general motors The company has proven to be a tightrope walker when it comes to balancing profits, vehicle portfolio and political whiplash under the Trump administration.

The Detroit automaker’s 2025 earnings pushed GM stock to a record high on Tuesday. That’s because the company beat earnings expectations and is anticipating an even better 2026, with a 20% increase in dividends and approval for $6 billion in new share buybacks.

Such performance is nothing new for GM, but Wall Street analysts say the auto industry’s weak sales, political turmoil and tariffs have made the company more attractive to investors than its peers.

“GM stands out for its strong execution, proven resiliency and high earnings quality (i.e. strong). [free cash flow] TD Cowen analyst Itai Michaeli said in a note to investors on Tuesday that it’s a unique NA truck franchise that is in the midst of inventory reductions, capital allocation, and has far superior fundamentals compared to traditional passenger vehicles.

GM’s stock price has risen more than 70% over the past year, and multiple Wall Street analysts have raised their post-earnings price targets to record levels, including TD Cowen, which on Tuesday raised its price target by 10% to $122 per share.

GM also increasingly stands out against its closest U.S. rival ford motor and Stellantis According to many analysts, it is important when it comes to performance and capital execution.

“We believe GM Overweight’s performance is best-in-class among North American-based automotive OEMs, a consistent management team and strategy, and a strong product portfolio that enables industry-beating pricing and margins,” JPMorgan analyst Ryan Brinkman said in a note to investors Tuesday.

Ford’s stock has risen more than 35% over the past year, but its adjusted profit forecast for this year is about half of what GM reported for 2025. Adjusted free cash flow estimates are also billions lower than GM’s in recent years.

The U.S.-listed stock of Stellantis, which is undergoing a major reorganization, has fallen about 27% over the past year. The company’s recent results have largely disappointed Wall Street, which had been trying to focus on rebuilding America.

GM’s 2025 results included net income attributable to stockholders of $2.7 billion, or earnings per share of $3.27. Adjusted earnings before interest and taxes were $12.7 billion, or $10.60 per share. Adjusted auto free cash flow was $10.6 billion.

One of GM’s hallmarks is its ability to weather political uncertainty under US President Donald Trump.

The biggest challenge for the entire auto industry is increasing costs due to tariffs and inflation. GM expects tariffs to cost $3.5 billion in 2026 and inflation at the midpoint of $1.25 billion.

But GM plans to ease some of that. Automakers expect to offset these costs with $500 million to $750 million in regulatory cuts under the Trump policy, a $1 billion to $1.5 billion reduction in EV losses from production cuts, and billions of dollars in other benefits such as pricing and warranty costs.

“Commodity and domestic shoring headwinds in 2026 could be offset by regulatory benefits, improved guarantees, lower EV losses, and lower tariffs from USMCA negotiations,” Tom Narayan, an analyst at RBC Capital, said in a note to investors on Tuesday.

More broadly, the company’s exit from EVs, which included a $7.9 billion writedown 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 cars as it wants without federal penalties, which were repealed by the Trump administration. It would also save billions of dollars in the cost of purchasing credits to offset these penalties.

GM Chief Financial Officer Paul Jacobson said on a conference call with investors Tuesday that no matter what changes come to the auto industry, GM’s success will depend on its ability to adapt to the new environment and the profitability of its vehicles.

“The GM team’s resilience and adaptability in the face of a rapidly evolving industry and significant macro challenges has been truly extraordinary,” he said.

It’s easier for GMs to balance themselves if they can tumble into piles of cash if necessary. Jacobson said Tuesday that the company had more than $20 billion in balances at the end of last year, citing 2025 EBIT-adjusted earnings of $12.7 billion and adjusted auto free cash flow of $10.6 billion.

The Detroit automaker was able to increase its average annual free cash flow generation from $3 billion to $10 billion over the past five years.

“This strong cash generation allows us to confidently execute on all pillars of our capital allocation framework,” Jacobson said. “Looking to 2026 and 2027, we plan to invest $10 billion to $12 billion annually, including approximately $5 billion to expand U.S. manufacturing capacity for some of our most in-demand vehicles and further reduce our tariff burden.”

This cash flow contributed to the company’s stock price increase by returning $23 billion to shareholders through share buybacks starting in November 2023, as well as by canceling more than 465 million shares, or nearly 35% of the company’s current approximately 930 million outstanding shares.

GM was the first major automaker to report fourth-quarter and 2025 earnings. That performance puts pressure on others to prove their tightrope walking abilities as well.

“I think it’s important to remember that this is a very different business now than the GM of 10 years ago, with a much more resilient earnings profile and a more balanced and pragmatic investment approach than was valued,” Barclays analyst Dan Levy said in an investor note Wednesday.

GM also hinted that costs and profits will continue to improve in 2026 and beyond as it restructures its lineup, improves costs and expands onshore production for the United States.

GM’s 2026 earnings outlook includes net income attributable to shareholders of $10.3 billion to $11.7 billion. Adjusted earnings before interest and taxes ranged from $13 billion to $15 billion. Earnings per share for the year are between $11 and $13.

—CNBC’s Michael Bloom contributed to this report.