GM’s ability to balance profits with Trump policy is paying off for investors

DETROIT — GM She’s proving to be walking a tightrope when it comes to balancing her earnings, her car portfolio and the political blows under the Trump administration.

The Detroit automaker’s 2025 results pushed General Motors stock on Tuesday to a new record high as the company beat earnings expectations and forecast a better 2026, including a 20% increase in its dividend and a new $6 billion stock buyback authorization.

These kinds of results are nothing new for General Motors, but Wall Street analysts say the company is attracting more investor interest than its peers amid sluggish U.S. auto industry sales, political turmoil and tariffs.

“GM is characterized by strong execution, proven resilience, and high (i.e. strong) earnings quality. [free cash flow] “Amid inventory reduction), capital allocation and a unique NA Truck franchise that has significantly better fundamentals versus traditional passenger vehicles,” Itay Michaeli, an analyst at TD Cowen, wrote in an investment note Tuesday.

GM shares have risen more than 70% over the past year, with several Wall Street analysts raising their price targets to record levels after earnings, including TD Cowen, which on Tuesday raised its target by 10% to $122 per share.

GM is also increasingly distinguished from its closest competitors in the United States ford motor and Stellantis When it comes to earnings performance and capital execution, according to many analysts.

“We rate GM Overweight with best-in-class execution among North American auto OEMs, a consistent and strategic management team, and a strong product portfolio that allows for above-industry pricing and margin,” JPMorgan analyst Ryan Brinkman wrote in an investment note Tuesday.

Ford shares have risen more than 35% over the past year, but its adjusted earnings forecast for this year is roughly half what GM reported for 2025. Its adjusted free cash flow forecast is also billions of dollars lower than GM has forecast in recent years.

US-listed shares of Stellantis, which is undergoing a major restructuring, have fallen nearly 27% over the past year. The company’s results have largely disappointed Wall Street recently, as it tries to focus on the turnaround in the United States.

General Motors’ 2025 results included results of $2.7 billion in net income attributable to shareholders, or earnings per share of $3.27; Adjusted earnings before interest and taxes of $12.7 billion, or $10.60 per share; and auto-adjusted free cash flow of $10.6 billion.

Part of what sets GM apart is its ability to navigate political uncertainty under US President Donald Trump.

The biggest challenge facing the auto industry as a whole is increasing costs due to tariffs and inflation. GM expects the tariffs to cost it $3.5 billion and inflation to reach $1.25 billion, at the midpoints, in 2026.

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

“For ’26, commodity and domestic transportation 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 an investment note on Tuesday.

More broadly, the automaker’s decline in electric vehicles, including $7.9 billion in writedowns last year, means it will continue to sell more profitable conventional cars equipped with internal combustion engines.

GM can now produce as many fuel-efficient vehicles as it wants without federal penalties, which the Trump administration rescinded. It would also provide billions of dollars in credit purchases to offset such penalties.

No matter what changes to the auto industry, GM’s success depends on its ability to adapt to new environments and the potential of its vehicles, GM Chief Financial Officer Paul Jacobson said on a call with investors Tuesday.

“In the face of a rapidly evolving industry and significant macro challenges, the GM team’s flexibility and adaptability have been truly exceptional,” he said.

GM’s balancing act is easier when it can fall, if necessary, on piles of cash. Jacobson noted Tuesday that the company had more than $20 billion as of the end of last year, referring to its adjusted EBITDA of $12.7 billion and $10.6 billion of auto-adjusted free cash flow in 2025.

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

“This strong cash generation enables us to confidently execute across all pillars of our capital allocation framework,” Jacobson said. “Looking forward to 2026 and 2027, we expect to invest between $10 billion to $12 billion annually, including approximately $5 billion to expand U.S. manufacturing capacity for certain higher-demand vehicles and further reduce our exposure to tariffs.”

This cash flow was in addition to returning $23 billion to shareholders through buybacks since November 2023. This helped boost the company’s stock price by canceling more than 465 million shares, or roughly 35% of its outstanding shares that 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 they can walk tight, too.

“We think it is important to remember that this is a very different business today compared to GM a decade ago, with a much more resilient earnings profile than expected, and a more balanced and pragmatic approach to investing,” Barclays analyst Dan Levy said in an investment note on Wednesday. “GM appears to be on track to return to the same strong earnings level achieved in recent years, even with tariff costs baked into its cost structure.”

GM also pointed to continued improvement in its costs and profits beyond 2026 as it continues to realign its lineup, optimize costs and increase production to the United States.

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

— CNBC Michael Bloom She contributed to this report.