GM surges on bold 2026 turnaround plan despite Q4 EV charges
$7.1B restructuring sets stage for $11-13 EPS forecast, 20% dividend hike and $6B buyback
General Motors issued an aggressively bullish 2026 forecast on Tuesday, projecting adjusted earnings per share of $11.00 to $13.00 and guiding net income to $10.3 billion to $11.7 billion, a dramatic rebound from 2025's $2.7 billion in net income. The guidance comes despite the automaker posting a fourth-quarter net loss of $3.3 billion, driven by $7.1 billion in restructuring charges as it realigns its electric vehicle strategy.
The Detroit automaker also rewarded shareholders with a 20% increase in its quarterly dividend to $0.18 per share and approved a new $6.0 billion share repurchase authorization. The capital return measures accompany a strategic reset that CEO Mary Barra described as positioning GM for long-term growth while adjusting to slower-than-expected EV adoption.
GM's adjusted diluted EPS for the fourth quarter of 2025 reached $2.51, beating analyst estimates of $2.32, even as quarterly revenue of $45.29 billion fell short of projections. The headline loss reflected the massive non-cash charges for restructuring EV production capacity and adjusting its China joint venture strategy—costs that the company characterized as one-time items necessary to reset its business model.
The 2026 guidance represents a quadrupling of earnings power from 2025 levels. GM projects adjusted EBIT of $13.0 billion to $15.0 billion for 2026, modestly above 2025's $12.7 billion, but with dramatically improved profitability as the company eliminates EV losses and reduces warranty costs. The company's forward price-to-earnings ratio stands at just 6.72, reflecting investor skepticism that analysts argue is unwarranted given the turnaround trajectory.
Analysts responded with a wave of price target increases. Barclays analyst Dan Levy maintained an "Overweight" rating and raised the firm's target to $100 from $85, citing the company's "healthy" production rates and expectations for reduced EV losses. JPMorgan's Ryan Brinkman also increased his target to $100 from $85, maintaining an "Overweight" rating, while Citigroup's Michael Ward raised his target to $98 from $86 with a "Buy" rating.
"GM's earnings power and buyback potential are too much to ignore," wrote Piper Sandler analyst Alexander Potter, who upgraded the stock to "Overweight" with a $98 target, noting "limited risk from Chinese competition." Analysts at BNP Paribas anticipate "continued outperformance levers in 2026 amid its more consistent execution, market share and free cash flow vs Ford, notably unlocking stronger shareholder returns."
The strategic reset reflects a significant shift in GM's EV strategy. Barra acknowledged that "near-term EV adoption will be much lower than planned" due to an evolving regulatory landscape and the discontinuation of federal consumer incentives. The company is taking aggressive action to address overcapacity, including ending production of the Chevrolet Bolt EV to make room for more profitable domestic models.
Despite the pullback from ambitious EV targets, Barra maintained that electric vehicles remain GM's "North Star." The company continues investing in new battery technologies and architectural improvements to enhance profitability when market demand accelerates. The strategy emphasizes maintaining capital discipline and strategic flexibility as the industry navigates uncertain regulatory and consumer adoption timelines.
Wall Street appears focused on the company's improved execution rather than the near-term restructuring pain. The $7.1 billion in fourth-quarter charges, combined with a previous $1.6 billion impairment announced in October, bring total EV-related charges to approximately $8.7 billion. Yet analysts view these as necessary medicine to position GM for sustainable profitability across both combustion and electric vehicle portfolios.
The company's strong free cash flow generation, even during the restructuring period, provides confidence in its ability to fund both the strategic transition and shareholder returns. The new $6 billion buyback authorization represents approximately 8% of GM's market capitalization, signaling management's conviction in the stock's valuation.
As GM enters 2026, investors will be watching for evidence that the restructuring is delivering the promised operational improvements. Key metrics include progress on reducing EV unit losses, continued strength in traditional vehicle demand, and execution on the capital allocation priorities that management has outlined. With analyst price targets suggesting more than 20% upside from current levels and a forward P/E multiple that remains well below historical averages, the burden of proof now shifts to execution.