After +50% Return in 2025, GM Gets Off to a Strong Start in 2026

Key Points

• General Motors’ shares jumped after a strong adjusted EPS beat and upbeat 2026 guidance.
• A large Q4 special-charge package weighed on GAAP results but appeared largely priced in.
• The stock’s outlook hinges on free cash flow durability and how EV adoption evolves in the United States.

U.S. automotive giant General Motors NYSE: GM just saw its historic rally get another boost. In 2025, shares of GM delivered a total return of over 54%, marking the stock’s best calendar year performance since its 2010 relisting on the NYSE.

The stock saw its latest surge on Jan. 27. Shares shot up by 8.8% as markets reacted to the company’s Q4 and full-year 2025 earnings report, and Wall Street analysts became more bullish on the stock.

GM Posts Strong EPS Beat, Eyes +10% Earnings Growth in 2026

In Q4, GM posted revenues of approximately $45.3 billion, or a decline of 5.1%. Notably, this figure was lower than the $45.8 billion, or a 4% decline, that analysts had anticipated. Despite falling short on revenue, the company posted a strong beat on adjusted earnings per share (EPS). The company’s $2.51 figure was solidly above expectations of $2.26. Overall, adjusted earnings per share (EPS) increased by almost 31% year-over-year, compared to estimates near 18%.

For the full-year 2026, GM expects adjusted EPS between $11 and $13. The midpoint of this range slightly exceeded analyst expectations of $11.95. Compared to full-year adjusted EPS of $10.60, the company’s midpoint guidance implies earnings growth of 13% in 2026.

Wall Street reacted positively to GM’s results, with several price target increases over the days that followed. The consensus price target on GM sits near $85, essentially the same as the stock’s Jan. 28 closing price. However, targets released from Jan. 27 to Jan. 28 are considerably more optimistic. They average just over $100, suggesting shares could rise another 18%.

GM Takes +$7 Billion Charge Amid EV Slowdown, China Restructuring

A notable eyesore was the company’s full-year net income attributable to shareholders of $2.7 billion. This was vastly below the company’s guidance of $8 billion at the midpoint. The company noted that this was largely due to the $7.2 billion of special charges it had to take in Q4.

Due to the weakening environment for electric vehicles (EVs), the company decided to cut production capacity. As a result, it had to take impairment charges on EV-related assets. It also reached settlements with companies in its EV supply chain that forecasted a certain level of orders. Additionally, GM faced charges from restructuring its joint venture in China with SAIC Motor.

These items flowed through GM’s income statement as expenses (or losses), which resulted in a lower pre-tax profit and, ultimately, lower net income.

The company first announced that it would take these charges earlier in January. This news led GM shares to fall around 2.7% on Jan. 9. Thus, these charges did not materially affect the market’s reaction to GM’s results, as they were already priced in.

GM’s Rally May Still Have Considerable Tread on the Tires

Even after a very strong 2025, General Motors does not appear to be a particularly expensive stock. The company generated $10.6 billion in adjusted automotive free cash flow in 2025, despite strong headwinds for the auto industry that year.

In 2026, its midpoint guidance for this figure is $10 billion, with industry-wide U.S. auto sales expected to decline moderately. Key to GM’s long-term success will be its ability to consistently generate free cash flow near this level.

If GM can sustain free cash flow around these levels, its valuation—roughly 7x forward earnings based on 2026 guidance—still looks reasonable and leaves room for upside.

EV Adoption Slows, But Long-Term Growth Still Shapes GM’s Strategy

U.S. EV sales declined in 2025 and lost market share to other vehicle types. According to Kelley Blue Book estimates, EVs accounted for 7.8% of new-car sales in the United States in 2025, down from 8.1% in 2024. However, analysts still expect EVs to gain significant market share in the long term. Big Four accounting firm Ernst & Young (EY) believes that EVs will account for 32% of U.S. light vehicle sales by 2035.

This makes GM’s scaling back of EV efforts somewhat questionable, although it is important to note that the company is not abandoning these products. Still, EY sees “policy roadblocks” keeping EV market share at just 11% by 2029. This may refer to the federal government’s less supportive stance toward EVs compared to the past. A slower rate of adoption would give GM time to optimize its EV strategy and generate solid gas-powered sales in the meantime.

GM’s leading position in full-size pickups and SUVs should also help protect it from EV adoption. These vehicles carry some of the highest margins in the auto industry, and have been relatively slow to electrify. Overall, GM looks well-positioned amid this backdrop over the next few years, supporting an optimistic outlook for its shares. Still, competition and changes to the EV environment deserve close monitoring.