Wall Street both adores and mistrusts a certain type of stock story: the comeback. For some time now, General Motors has been quietly writing one of those without the drama that follows Stellantis or the noise that follows Tesla. You wouldn’t believe that the company with its headquarters in Detroit has been outperforming most of its competitors for portions of the last two years if you were to walk past the Renaissance Center on a weekday morning. The structure has the same appearance. However, the atmosphere has changed.
In contrast to projections that had actually predicted a slight decline, GM ended the first quarter of 2026 with adjusted earnings per share of $3.70, a 33% increase from the previous year. It’s not an accidental beat. It occurred in spite of tariff uncertainty, a soft U.S. auto market that saw deliveries drop by nearly 10%, and an Iranian war driving gas prices above $4 per gallon. Nevertheless, the company increased its adjusted EBIT range by an additional $500 million in its full-year guidance. It seems that GM has finally figured out how to turn a profit even in the face of adversity.
It’s interesting to note how little of this is motivated by the stereotypes of old Detroit. Indeed, full-size pickups continue to make the most money, and the new model that is anticipated in 2027 alone could add about $1.7 billion. However, the more significant figures are hidden somewhere else. OnStar’s deferred revenue increased by 50% annually. Revenue from Super Cruise increased by 85%. The number of subscribers to those services is approaching 850,000 and 13 million, respectively. Sitting inside a business that still trades at about six times forward earnings is recurring, high-margin revenue, the kind for which tech investors typically pay premium multiples.
The disconnect is difficult to ignore. With a 13% year-to-date increase thanks to the launch of Ford Energy and a Ford Pro software story that analysts can’t stop talking about, Ford has dominated the news this year. In contrast, GM stock has actually decreased by roughly 3% in 2026. Even though the underlying business is arguably in better shape than it has been in ten years, the market appears to be penalizing it for not having a new adjacency to sell. Wolfe Research, which upgraded the stock in late March, claimed that investors are undervaluing the 2027 tailwinds, which include the new pickup, lower warranty costs, less tariff exposure, and better EV losses. Their projected EPS for 2027 is $16.03. That stock is currently trading at a price that is significantly less than six times forward earnings for the next two years.
Of course, there are actual risks. During the quarter, the U.S. market share decreased from 17.2% to 16.5%. A $1.08 billion charge related to EV realignment was accepted by the company. China continues to be a structural challenge. Additionally, a portion of the long-term optionality narrative has been lost with the closure of Cruise, the autonomous vehicle division that was once intended to be GM’s moonshot. Some investors have concluded that the easy money has already been made, such as George Atuan, who took an 18.7% profit and left in August 2025.
However, as this develops, it’s easy to argue that the market is repeating the mistake it made with Tesla: concentrating on the story rather than the data. GM leads its industry, has a forward PEG of 0.44, and is the top quant-rated automaker on Seeking Alpha. The company’s operating margin continues to grow despite Mary Barra leading it through a pandemic, a UAW strike, a shortage of chips, and now a conflict in the Middle East. It’s still unclear if that earns GM a permanent re-rating or if it stays in the cyclical bin Wall Street has always reserved for Detroit. On paper, however, the argument for owning it has rarely been more compelling.
