GM’s ability to balance profits, Trump’s policies pay off for investors

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

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

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

“GM is distinguished by strong execution, proven resilience, high earnings quality (i.e. strong [free cash flow] in a destocking environment), capital allocation and a unique NA truck franchise with much better fundamentals than traditional passenger cars,” TD Cowen analyst Itay Michaeli wrote in a note to investors Tuesday.

Shares of GM have risen more than 70% over the past year as several Wall Street analysts have raised their price targets to record post-earnings levels, including TD Cowen, which raised its target Tuesday by 10% to $122 per share.

GM is also increasingly distancing itself from its closest American rivals Ford engine And Stellantis in earnings performance and capital execution, according to many analysts.

“We rate GM Overweight for its best execution among North America-based automotive OEMs, its cohesive strategy and management team, and its strong product portfolio enabling industry-beating pricing and margin,” JPMorgan analyst Ryan Brinkman wrote in a note to investors Tuesday.

Ford’s shares are up more than 35% over the past year, but its adjusted profit forecast for the year is about half of what GM announced for 2025. Its adjusted free cash flow expectations are also billions lower than GM’s in recent years.

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

GM’s 2025 results included $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 automotive adjusted free cash flow of $10.6 billion.

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

The biggest challenge for the auto industry as a whole has been 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 2026 midpoint.

But GM plans to alleviate some of that problem. The automaker hopes to offset those costs with regulatory savings of $500 million to $750 million from Trump’s policies, smaller electric vehicle 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 headwinds and reshoring could be offset by regulatory benefits, warranty enhancements, reduced EV losses and lower tariffs resulting from USMCA negotiations,” RBC Capital analyst Tom Narayan said in a note to investors Tuesday.

More broadly, the automaker’s retreat from electric vehicles, including $7.9 billion in writedowns last year, means it will continue to sell more profitable traditional vehicles powered by internal combustion engines.

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

GM Chief Financial Officer Paul Jacobson said on an investor call Tuesday that regardless of changes in the auto industry, GM’s success depends on its ability to adapt to new environments and the likelihood of bringing its vehicles to market.

“In the face of a rapidly changing industry and significant macroeconomic challenges, the resilience and adaptability of the GM team has 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 on hand to close last year, referencing its $12.7 billion in EBIT-adjusted earnings and $10.6 billion in auto-adjusted free cash flow in 2025.

The Detroit automaker has managed 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 forward to 2026 and 2027, we plan to invest between $10 billion and $12 billion annually, including approximately $5 billion to increase U.S. manufacturing capacity for some of the most in-demand vehicles and further reduce our exposure to tariffs.”

This cash flow was in addition to returning $23 billion to shareholders through repurchases since November 2023. This helped drive up the company’s stock price by eliminating more than 465 million shares, or nearly 35%, of its outstanding shares which now stand at around 930 million.

GM was among the first major automakers to report its fourth-quarter and 2025 results. Its performance puts pressure on others to also prove their ability to walk a tightrope.

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

GM also hinted at continued improvement in its costs and profits after 2026, as it continues to realign its lineup, improve costs and move more production to the United States.

GM’s 2026 earnings forecast 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; and earnings per share of between $11 and $13 for the year.

— CNBC Michael Bloom contributed to this report.