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Is the GM stock rally just beginning?
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These days, it’s good to be a major tech player. But it’s also good to be a legacy giant looking to get back on the radar if you’re General Motors ( GM ).
“That’s the level that nobody thought would ever be consistently hit and it seems like they may be hitting that for the next few years.”
That execution has led to GM earning the 2024 Yahoo Finance Surprise of the Year award .
Murphy praised veteran GM chair and CEO Mary Barra for her leadership over time. Barra, he said, recognized the “need to strengthen your core and make the core business that much stronger so you can fund the future."
Founded in Flint, Mich., in 1908, GM is a member of the “Big Three” automakers alongside Ford ( F ) and Stellantis ( STLA ), formerly Chrysler.
GM stock hit a 52-week high of $61.24 in December and is up 47% year to date — far ahead of its Big Three peers.
Ford's stock is down 15% in 2024, while Stellantis shares have dropped nearly 40%. Stellantis just axed its CEO amid poor execution .
Some strength for GM comes courtesy of its crossover vehicles and a more keen eye toward electric vehicle profits, Murphy said. What has surprised Barra this year is how EVs such as the Cadillac Lyriq have been embraced by consumers, she told Sozzi in an exclusive interview.
GM's third quarter earnings topped Wall Street estimates on the top and bottom lines . Revenue reached $48.76 billion, beating estimates of $44.69 billion. Adjusted earnings per share came in at $2.96, surpassing the $2.43 expected.
The automaker also raised its full-year outlook for the third time this year.
“Importantly, when we get to calendar years '27 and '28, they have their pickups and large SUVs, which are an unbelievable franchise,” said Murphy, adding that no competitor has achieved this feat. “We may actually hit 18 million units in '27 and '28. I think there’s a tremendous amount of upside in the cycle,” he said.
It hasn't all been rosy at GM, though. Earlier in the month, it announced a restructuring in China to the tune of $5 billion to shore up business woes in the ultra-competitive country. It also shared plans to shutter Cruise, its robotaxi division, by the first half of next year.
Barra said it would have been too costly to pursue a robotaxi fleet that competes with Elon Musk's Tesla ( TSLA ).
Other potential headwinds in 2025 include outside competitors in EVs and the Trump administration’s proposed tariffs on Mexico and Canada, both of which are key auto supply regions.
Regarding upstart EV disruptors like Tesla, the Big Three have pivoted and added electric vehicles to their lineups. At GM, “They have a very robust EV launch schedule, which unfortunately, particularly in the US, the market is really not there for that right now,” Murphy said.
Read more: Here's why Walmart won Yahoo Finance's 2024 Company of the Year award
More tariffs also remain an elephant in the room. The incoming Trump administration may crack down on enforcement of the rule of origin, which currently tacks on a 2.5% duty on products that don't meet the requirements, per Murphy.
Trump has also floated additional tariffs, including a 25% charge on key auto supplier countries Mexico and Canada.
Barra warned in a new exclusive interview with Sozzi tariffs could lead to higher auto prices, and potentially softer demand.
Tariff risks aside, Murphy remains confident about the auto industry. “Four years is somewhat of a short time frame,” he said. “Ripping up the business for something that may be a four-year policy is really difficult to do.”
“I think the reality is the earnings and cash flow that you’re getting right now [at GM] are at least sustainable for the next four years or so,” Murphy said.
Brian Sozzi fields insight-filled conversations and chats with the biggest names in business and markets on Opening Bid . You can find more episodes on our video hub or watch on your preferred streaming service .
Grace Williams is a writer for Yahoo Finance.
Read more about Yahoo Finance's 2024 company awards: