Jamie Spencer
General Motors (GM) saw its stock drop 8% today despite issuing higher-than-expected profit guidance for 2025. The decline comes as investors react to the automaker’s acknowledgment that its outlook excludes the potential impact of tariffs expected to be imposed by President Donald Trump.
GM’s Profit Outlook Beats Expectations
GM provided a 2025 adjusted EBIT guidance of $13.7 billion – $15.7 billion, exceeding:
- Its previous forecast of about $14.9 billion.
- Wall Street’s average estimate.
However, the company clarified that its guidance does not factor in the potential negative effects of a 25% tariff on imports from Canada and Mexico, which Trump has threatened to impose. GM operates five major factories in those countries, making it highly vulnerable to new trade policies.
Mary Barra’s Talks with Trump
GM CEO Mary Barra revealed that she had spoken with President Trump about the risks of tariffs. In an interview with Yahoo Finance, she stated:
“He very much understands exactly what the ramifications will be.”
However, her comments did not suggest that Trump had reconsidered his stance on imposing the tariffs. Investors remain concerned that the potential duties could significantly impact GM’s profitability in the coming years.
Market Reactions and AI Stock Comparisons
While GM’s outlook appears solid, some investors are shifting focus to AI stocks with stronger growth potential. Many believe that certain AI-related companies offer higher returns in a shorter time frame than traditional automakers like GM.
For those looking for alternatives, analysts suggest exploring affordable AI stocks trading at less than five times earnings, which could provide better investment opportunities in the evolving tech landscape.
Conclusion
GM’s strong 2025 guidance failed to reassure investors due to the uncertainty surrounding Trump’s proposed tariffs. While the company remains a key player in the auto industry, the potential impact of new trade policies has cast a shadow over its future profitability.
