Ford or General Motors: Which Stock to Buy Heading into 2026?

Core Insights - General Motors (GM) and Ford are competing in the American auto industry, with GM currently showing stronger stock performance and fundamentals as they both transition towards electric and software-defined vehicles [1][2]. General Motors - GM is the top-selling automaker in the U.S. with approximately 17% market share, driven by strong demand for its core brands, particularly pickups and SUVs [3]. - The company is experiencing a recovery in China, with vehicle sales increasing by 10% year over year in Q3 2025, marking two consecutive quarters of growth [4]. - GM's software and services are significant growth drivers, generating around $2 billion in revenues year-to-date, with deferred software revenues rising over 90% year over year to $5 billion by the end of Q3 [5]. - GM is strategically involved in securing domestic battery materials through a joint venture in Lithium Americas' Thacker Pass project, positioning itself as a major lithium source in North America [6]. - The company has been shareholder-friendly, repurchasing over $3.5 billion in stock, reducing its share count by 15% year over year, with an additional $2.8 billion available for buybacks [7]. - The Zacks Consensus Estimate indicates a slight 0.3% sales decline for GM in 2026, but a 13% increase in earnings per share (EPS) is expected [7]. Ford - Ford is adjusting its strategy in response to slower EV adoption and rising costs, focusing more on hybrids, gas-powered vehicles, and smaller electric models rather than large EVs [8]. - The introduction of Ford's Universal EV Platform aims to reduce costs and enhance flexibility, with the first vehicle expected to be a midsize electric pickup starting production in 2027 [9]. - Ford anticipates a significant turnaround in its EV unit, expecting to reach breakeven by 2029, but this transition will incur approximately $19.5 billion in special items, impacting cash flow mainly in 2026 and 2027 [11]. - Ford Pro is a bright spot for the company, showing strong demand for Super Duty trucks and growing software and service revenues [12]. - The Zacks Consensus Estimate suggests a 3% decline in Ford's sales for 2026, while earnings are projected to increase by about 35% [13]. Comparative Analysis - GM is viewed as a more compelling investment heading into 2026 due to its focus on long-term profitability, narrowing EV-related losses, and strong momentum in software and performance in China [14]. - Ford's strategic adjustments are sensible, but the one-time charges related to its EV reset and delayed profitability timeline for its Model e present challenges [15]. - Valuation favors GM, trading at a forward earnings multiple of 7.14x compared to Ford's 9.55x, making GM the more attractive stock [16].