Shares of General Motors Co (NYSE:GM) rose sharply on Wednesday, after the company reported its second-quarter results on Tuesday.
While General Motors’ quarterly beat reflects "the durability of its pricing power and cost execution," the company is "finding new roads" by growing its non-legacy businesses, according to RBC Capital Markets.
The General Motors Analyst: Analyst Tom Narayan reiterated an Outperform rating, while raising the price target from $94 to $100.
The General Motors Thesis: OnStar is the company’s "most mature non-legacy business," with revenues expected to surpass $3 billion in 2026 with gross margins of around 70%, which implies about $2.1 billion in gross profit, Narayan said in the note.
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OnStar’s implied EBIT could grow to around $1.95 billion this year, representing about 13% of General Motors’ 2026 EBIT guidance midpoint of $15 billion, the analyst stated. He added that this share "could grow as Super Cruise penetration scales."
General Motors’ partnership with Peak Energy represents a "potentially meaningful long-term opportunity," and the segment could contribute around $4 billion in EBIT at scale, representing about 26% of the company’s 2026 EBIT guidance midpoint, Narayan noted.
Revenues from GM Defense is expected to reach around $700 million with double-digit margins and a backlog building to exceed $1 billion in ISV (Infantry Squad Vehicle) awards alone, the analyst said.
"GM Insurance is earlier stage but strategically compelling," he further wrote.
2026 Outlook: General Motors raised its adjusted EBIT guidance by $500 million at the midpoint to $14-$16 billion, supported by:
- $250 million of better pricing
- $250 million of warranty improvement
- A slightly better commodity outlook
Commodity inflation seems "overstated," with prices for key raw materials declining from the levels in the first quarter, the analyst noted.
GM Stock Price Activity: General Motors shares were up 3.81% at $82.55 at the time of publication on Wednesday, according to Benzinga Pro data.
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