GM shares hit a record. Demand for big cars helped beat profit forecasts

General Motors beat analysts' expectations in the previous quarter thanks to strong demand for pickup trucks and SUVs. The auto concern improved its profit forecast for the current year and approved a new share buyback program. Against the backdrop of strong reporting, GM quotes soared nearly 10%, hitting an all-time high. Despite the growth, most analysts on Wall Street still recommend buying them.

The company reported fourth-quarter 2025 adjusted earnings before taxes rose 13% year over year to $2.84 billion, with earnings per share of $2.51, beating the $2.21 expected by analysts surveyed by Reuters.

The profit growth was provided by high sales of the largest pickup trucks and SUVs of the concern - Cadillac Escalade and GMC Sierra, Bloomberg writes . Revenue of the North American division of the company, according to the report of GM, amounted to $2.24 billion. However, low demand for electric cars and inexpensive models of the concern led to the fact that the total revenue of the car concern fell by 5.1% to $45.3 billion compared to the same period last year.

GM's electric vehicle business has been under pressure since the repeal of a $7500 consumer tax credit for electric vehicles on Sept. 30, Reuters notes. However, on Jan. 27, the company maintained its electric vehicle strategy, saying it would work to reduce costs. After writing off $6 billion due to reduced investment in electric vehicles, GM posted a $3.3 billion loss, Reuters writes.

Forecasts for the futureNevertheless, General Motors' expectations remain optimistic: the company has improved its forecast for adjusted earnings for 2026 and expects to earn between $13 billion and $15 billion.The previous forecast for the year was $12.7 billion, Bloomberg writes.

The improved outlook underscores how much sales of expensive new models and a softer regulatory environment in terms of environmental compliance are contributing to GM's profit growth, the agency said. The new guidance is based on sales of more pickup trucks and full-size SUVs and fewer electric vehicles. The Detroit-based automaker is benefiting from President Donald Trump's efforts to ease fuel efficiency rules imposed under Joe Biden's administration, allowing manufacturers to sell more "heavy gasoline vehicles" without paying fines or having to buy electric vehicle credits, Bloomberg explains.

GM also raised its quarterly dividend by 20 percent and approved a new $6 billion share repurchase program. The company has repurchased more than $20 billion worth of stock in recent years, helping its stock price rise to all-time highs, Bloomberg notes.

After the report was published, GM shares soared 9.8% in trading on January 27, hitting an all-time high. GM Chief Financial Officer Paul Jacobson told Yahoo Finance that the automaker remains "one of the most valuable companies in the market in terms of free cash flow yield." "We think the stock is undervalued," Jacobson said.

According to MarketWatch, most analysts covering GM are now recommending investors buy the stock. "GM is performing at a high level. Importantly, the company has reauthorized its share repurchase program despite concerns that declining spending on electric vehicles could slow the pace of those share repurchases," Piper Sandler analyst Alexander Potter told Bloomberg.

This article was AI-translated and verified by a human editor