Why General Motors' 2025 Rally Still Offers Convincing Entry Points for 2026 Growth

General Motors (GM) has delivered a remarkable 55% stock price surge in 2025, outperforming peers like Tesla and Ford. However, despite this rally, the company remains undervalued relative to its intrinsic worth and poised for 2026 growth, driven by strategic cost management, regulatory adaptability, and a rebounding EV market. This analysis explores why investors should view GM's current valuation as a compelling entry point for capitalizing on its 2026 momentum.

Undervaluation: A Mispricing Amidst Optimism

GM's price-to-earnings (P/E) ratio of 15.83 as of December 2025 appears elevated compared to its 10-year historical average of 4.67. Yet, this metric fails to capture the company's intrinsic value. A discounted cash flow (DCF) analysis estimates GM's intrinsic value at $97.40 per share, suggesting the stock is undervalued by 14.9%. This discrepancy arises from GM's aggressive share buyback program, which has reduced its share count by 15% year-to-date, signaling management's confidence in the company's long-term prospects.

Profitability metrics also hint at untapped potential. While GM's net income margin for 2024 was 3.2%-a decline from 5.9% in 2023 according to financial reports-the company has taken decisive steps to reverse this trend. CFO Paul Jacobson has emphasized progress in reducing electric vehicle (EV) losses, managing warranty costs, and offsetting tariffs. These initiatives, combined with a $1.6 billion charge to reallocate resources toward internal combustion engine (ICE) and hybrid vehicles as reported, underscore GM's commitment to profitability over short-term EV subsidies.

Catalysts for 2026 Growth

1. Strategic Cost Management and EBITDA Resilience

GM's adjusted EBITDA forecast for 2025 was raised to $12–13 billion, reflecting resilience despite a 20.48% year-over-year decline in Q3 2025 EBITDA according to financial data. This resilience stems from disciplined cost controls and a shift in production focus. For instance, Chevrolet, GMC, and Cadillac EV sales grew by 113%, 109%, and 88%, respectively, year-over-year through Q3 2025, demonstrating that GM's EV strategy is still gaining traction even as it pivots toward ICE.

2. EV Market Share Gains and Regulatory Adaptability

The U.S. EV market, though temporarily dented by the expiration of federal tax credits in late 2025, is rebounding. GM captured a 16.5% market share in Q3 2025, driven by the Chevrolet Equinox's success according to market analysis. Analysts project EVs to account for 11.8% of U.S. vehicle sales in 2026 as reported, a trend GM is well-positioned to capitalize on.

Regulatory headwinds, such as the rollback of CAFE standards and California's revoked emissions authority as noted, have created uncertainty. However, GM's pivot to ICE and hybrids-while controversial-reflects a pragmatic approach to navigating policy-driven market shifts. CEO Mary Barra has acknowledged that policy, not consumer demand initially drove the EV push, suggesting GM is now aligning with a more realistic regulatory landscape.

3. Global EV Expansion and Infrastructure Tailwinds

Beyond the U.S., GM benefits from global EV growth. China, which accounts for over half of 2025's global EV sales, and emerging markets like Vietnam and Brazil are accelerating adoption. GM's focus on cost-efficient production and material cost reductions as reported positions it to compete in these price-sensitive markets.

Infrastructure developments further bolster GM's prospects. The U.S. is projected to need 2.2 million public charging ports by 2030 as indicated, and Tesla's Supercharger network opening to non-Tesla vehicles as noted will expand access for GM's EV customers. These factors mitigate concerns about charging limitations and support long-term EV adoption.

Conclusion: A Compelling Case for 2026

While GM's 2025 rally has priced in much of its near-term optimism, the company's undervaluation relative to its intrinsic value and its strategic alignment with 2026 growth drivers-cost discipline, EV market share gains, and regulatory adaptability-make it an attractive investment. As GM navigates the transition from policy-driven EV subsidies to sustainable profitability, its disciplined approach and operational flexibility position it to outperform in 2026.