GM Stock Is Trading at a P/E of 22 While the Company Invests Billions in Its Next Decade — Is the Market Missing Something?

The Saginaw Metal Casting Operations, the third-oldest GM plant in the nation, is a functioning American factory that operates three shifts and produces engine blocks using steel, heat, and a significant amount of human labor. It appears to be what it has always been when you drive past it on a Tuesday morning. Before the majority of current Americans were born, the plant was a part of General Motors. However, GM declared in early April 2026 that it was investing more than $150 million in that same facility to get ready for the sixth generation of its V-8 engine, which will begin production in 2027, rather than to build anything new. The investment was made quietly and without much fanfare. In a sense, it makes a fairly clear statement about where GM believes its short-term funding comes from.

To put it diplomatically, GM stock has had a challenging few years. The share price fluctuated between $41.60 at the 52-week low and $87.62 at the high, indicating a real lack of confidence in General Motors’ future. The stock is currently trading at about $72.54 with a P/E of 22.20 as of early April 2026. This is a relatively modest valuation for a company that reported $187.4 billion in revenue in 2024 and beat earnings estimates by 10.65% in Q4 2025. Given that revenue actually decreased 5.06% year over year in the same quarter, the EPS beat is noteworthy. Despite selling fewer cars, the company’s earnings per share increased. Depending on how you interpret it, that could be a warning about volume trends or an indication of extraordinary cost discipline. Most likely both.

The central conflict in the GM investment thesis is genuine and difficult to resolve. OnStar subscriptions, Super Cruise driver assistance features, and embedded technology that charges monthly whether or not the owner purchases another car are just a few of the credible steps the company has been taking toward a future in which automobiles generate recurring software revenue. This argument has been presented in detail by The Motley Fool and other stock analysts: mainstream automakers have low profit margins, and software and services—rather than metal and assembly—are the route to higher margins.

The management of GM is aware of this. For a number of years, CEO Mary Barra has been arguing this point. Additionally, preliminary findings from OnStar and Super Cruise indicate that the subscription approach is producing actual revenue rather than merely slide deck estimates.

However, the company isn’t exactly hiding the parallel story that the V-8 engine investments tell. For sixth-generation V-8 engine blocks, GM is investing $150 million in Saginaw. For the same generation of powertrains, it had previously committed half a billion dollars to the Flint Engine plant. Additionally, it has halted EV production at Factory Zero in order to reallocate capacity while increasing production of ICE-based Silverados at that facility. All four brands saw a 9.7% drop in sales in the first quarter of 2026, which begs the question of whether the volume decline is structural or transient.

In essence, GM’s response has been to reduce EV volumes that have fallen short of expectations while concentrating on the vehicles that continue to sell well, such as full-size trucks and SUVs. Which year’s data you consider most important will determine whether that is a wise adaptation or a retreat from the transition.

This story’s EV chapter is the one that has damaged the stock’s reputation among certain investors. Wide-ranging pledges were made by GM, including the $7 billion Michigan investment, the Ultium battery platform, and production targets for EVs that were lowered and then revised once more. Quietly, the Ultium brand was discontinued. There is no longer an opening date for a Samsung battery facility.

LG Energy Solution, a partner, purchased back a third Ultium Cells facility. Due to pullbacks in EV investment, GM wrote down an extra $6 billion. All of that doesn’t sound good on its own. However, it’s important to note that businesses that overcommitted capital to goods that consumers weren’t yet purchasing in large quantities have fared the worst during the EV transition. Even though the process has appeared awkward to the public, GM’s willingness to acknowledge and make adjustments may end up being more sensible than moving forward on a timeline that the market wasn’t prepared for.

Watching GM handle this situation gives me the impression that the company is playing two games at once and handling both with more discipline than it is given credit for. The cash cow—trucks, SUVs, and other high-margin cars that Americans clearly want to purchase—is being extended and financed. V-8 blocks will be produced at the Saginaw facility at least until the early 2030s. OnStar and Super Cruise are producing the kind of recurring income that investors in pure-play tech companies have paid huge multiples to access, while software revenue expansion is real and expanding. Almost as a byproduct of the cars it was already selling, GM receives that business.

It’s still unclear if the volume softness and EV retreat will continue to negatively impact sentiment or if GM stock will re-rate upward as the software margin story becomes more understandable to investors. The market is only using modest expectations, according to the P/E of 22. That multiple seems at least somewhat skeptical rather than merely conservative for a company that beat EPS by double digits in the most recent quarter, reported $187 billion in annual revenue, and employed 156,000 people across facilities from Saginaw to South Korea. GM is not a new company. It’s not a tech company with rapid growth.