Dear Reader,
One of the market's greatest "sleeper stocks" may be about to wake up.
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Regards,
Kelly Brown
Host, Chaikin Analytics
After +50% Return in 2025, GM Gets Off to a Strong Start in 2026
Author: Leo Miller. Article Posted: 1/29/2026.
Summary
- 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) saw its rally get another boost. In 2025, GM shares delivered a total return of more than 54%, the stock's best calendar-year performance since its 2010 relisting on the NYSE.
Shares jumped 8.8% on Jan. 27 after the company's Q4 and full-year 2025 earnings report and a wave of optimistic analyst reactions.
GM Posts Strong EPS Beat, Eyes +10% Earnings Growth in 2026
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See the full story on this opportunity now.In Q4, GM reported revenues of approximately $45.3 billion, a decline of 5.1% and slightly below analysts' estimate of $45.8 billion (a 4% decline). Despite missing on revenue, GM posted a solid beat on adjusted earnings per share (EPS): $2.51 versus expectations of $2.26. Adjusted EPS rose nearly 31% year over year, compared with estimates near 18%.
For full-year 2026, GM guided adjusted EPS in a range of $11 to $13. The midpoint of that range modestly exceeded analyst expectations of $11.95. Against full-year adjusted EPS of $10.60 in 2025, the midpoint implies roughly 13% earnings growth in 2026.
Wall Street reacted positively to the results, with several firms raising price targets in the days that followed. The consensus price target sits near $85, roughly the stock's Jan. 28 closing price. However, targets issued Jan. 27–28 average just above $100, implying about 18% upside from current levels.
GM Takes +$7 Billion Charge Amid EV Slowdown, China Restructuring
A notable blemish was full-year net income attributable to shareholders of $2.7 billion — far below the company's midpoint guidance of $8 billion. Management said this shortfall was largely driven by $7.2 billion of special charges recorded in Q4.
Weakness in the electric vehicle (EV) market prompted GM to cut production capacity, which led to impairment charges on EV-related assets. The company also reached settlements with EV-supply partners over forecasted order volumes and incurred charges from restructuring its China joint venture with SAIC Motor.
These items flowed through GM's income statement as expenses and losses, reducing pre-tax profit and ultimately lowering net income.
GM first announced it would take these charges earlier in January, which pressured the stock — shares slid about 2.7% on Jan. 9. As a result, the charges were largely priced in before the earnings release.
GM's Rally May Still Have Considerable Tread on the Tires
Despite a very strong 2025, GM does not appear overvalued. The company generated $10.6 billion in adjusted automotive free cash flow in 2025, despite significant headwinds for the auto industry that year.
For 2026, GM's midpoint guidance for adjusted automotive free cash flow is $10 billion, while industry-wide U.S. auto sales are expected to decline moderately. Sustaining free cash flow near these levels will be key to GM's longer-term outlook.
If GM can maintain free cash flow around this level, its valuation — roughly 7x forward earnings based on 2026 guidance — 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. Kelley Blue Book estimates put EVs at 7.8% of new-car sales in the U.S. in 2025, down from 8.1% in 2024. Still, many analysts expect EVs to gain significant share over the long term. Big Four accounting firm Ernst & Young (EY) projects EVs will account for 32% of U.S. light-vehicle sales by 2035.
That outlook makes GM's scaling back of some EV efforts notable, though the company is not abandoning electrification. EY also warns of "policy roadblocks" that could keep EV market share near 11% by 2029, reflecting potentially less supportive federal policies. A slower adoption curve would give GM time to refine its EV strategy while continuing to rely on profitable internal-combustion models.
GM's leading position in full-size pickups and SUVs should help shield its profitability. These vehicles carry some of the highest margins in the industry and have been slower to electrify. Overall, GM appears well-positioned over the next few years, supporting a constructive outlook for its shares — though competition and shifts in the EV landscape warrant close monitoring.
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