GM's ability to balance profits, politics under Trump is paying off for investors

DETROIT — General Motors is proving to be a star tightrope walker when it comes to balancing its profits, vehicle portfolio and political whiplashing under the Trump administration.

The Detroit automaker's 2025 results propelled GM's stock Tuesday to a new record high as the company beat earnings expectations and projected an even better 2026, including a 20% increase in its dividend and a new $6 billion stock buyback authorization.

Those kinds of results are nothing new for GM, but Wall Street analysts say the company is drawing more investor interest than its peers amid the U.S. auto industry's slowing sales, political turmoil and tariffs.

"GM stands out for strong execution, proven resilience, high earnings quality (i.e. strong [free cash flow] amid inventory de-stock), capital allocation and a unique NA Truck Franchise sporting far better fundamentals vs. traditional passenger auto," TD Cowen analyst Itay Michaeli wrote in a Tuesday investor note.

Shares of GM are up more than 70% during the past year, with multiple Wall Street analysts raising their price targets to record levels after earnings, including TD Cowen, which raised its target Tuesday by 10% to $122 per share.

GM is also increasingly standing out from its closest U.S. rivals Ford Motor and Stellantis when it comes to earnings performance and capital execution, according to many analysts.

"We rate GM Overweight for its best-in-class execution amongst North America–based auto OEMs, consistent management team and strategy, and strong product portfolio allowing for above-industry pricing and margin," JPMorgan analyst Ryan Brinkman wrote in a Tuesday investor note.

Ford's shares are up more than 35% during the past year, but its adjusted earnings forecast for the year is roughly half of what GM reported for 2025. Its adjusted free cash flow expectations also are billions below GM's in recent years.

GM, Ford and Stellantis stocks

U.S.-listed shares of Stellantis, which is going through a major restructuring, are off roughly 27% over the past year. The company's results have largely disappointed Wall Street recently, as it attempts to focus on a U.S. turnaround.

GM's 2025 results included results included $2.7 billion in net income attributable to stockholders, or earnings per share of $3.27; adjusted earnings before interest and taxes of $12.7 billion, or $10.60 per share; and adjusted automotive free cash flow of $10.6 billion.

Part of what's set GM apart has been its ability to navigate through political uncertainty under U.S. President Donald Trump.

The biggest challenge for the automotive industry as a whole has been increased costs due to tariffs and inflation. GM expects tariffs will cost it $3.5 billion and inflation will be a $1.25 billion, at the midpoints, in 2026.

But GM plans to mitigate some of that. The automaker expects to offset those costs with $500 million to $750 million in regulatory savings under Trump policies, narrower EV losses of $1 billion to $1.5 billion from lower production, and billions of dollars in other benefits such as pricing and warranty expenses.

"For '26, commodity and onshoring headwinds could be offset by regulatory benefits, warranty improvements, narrowing EV losses, and lower tariffs resulting from USMCA negotiations," RBC Capital analyst Tom Narayan said in a Tuesday investor note.

More broadly, the automaker's EV retreat, including $7.9 billion in write-downs last year, means it's going to continue to sell more profitable traditional vehicles with internal combustion engines.

And GM can now produce as many gas-guzzling vehicles as the company would like without federal penalties, which were eliminated by the Trump administration. It will also save billions of dollars on purchasing credits to offset such penalties.

GM CFO Paul Jacobson said on a call with investors Tuesday that no matter what changes come to the auto industry, GM's success depends on its ability to adapt to new environments and the probability of its vehicles.

"In the face of a rapidly evolving industry and significant macro challenges, the resilience and adaptability of the GM team have been truly exceptional," he said.

GM's balancing act is easier when it can fall, if needed, onto piles of cash. Jacobson on Tuesday noted the company had more than $20 billion to end last year, referring to its $12.7 billion of EBIT-adjusted earnings and $10.6 billion of adjusted automotive free cash flow in 2025.

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

"This robust cash generation enables us to execute confidently across all pillars of our capital allocation framework," Jacobson said. "Looking ahead to 2026 and 2027, we expect to invest $10 billion to $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 exposure."

That cash flow has been in addition to returning $23 billion back to shareholders through repurchases since November 2023. That has helped boost the company's stock price by eliminating more than 465 million shares, or nearly 35%, of its outstanding shares that are now at about 930 million.

GM was among the first major automakers to report its fourth-quarter and 2025 earnings. Its performance puts pressure on others to prove their tight-walking ability as well.

"We think it's important to remember this is a very different business today vs. the GM of a decade ago, with a much more resilient earnings profile than appreciated, and a more balanced and pragmatic approach to investment. GM seems on track to return to the same robust earnings level achieved in recent years, even with tariff costs in its cost structure," Barclays analyst Dan Levy said in a Wednesday investor note.

GM also alluded to its costs and earnings continuing to improve post-2026 as it continues to realign its lineup, improve costs and onshore more production to the U.S.

GM's 2026 earnings guidance includes net income attributable to stockholders of between $10.3 billion and $11.7 billion; adjusted earnings before interest and taxes of $13 billion to $15 billion; and earnings per share of between $11 and $13 for the year.

— CNBC's Michael Bloom contributed to this report.