GM beats estimates by 14% as Mobileye shows auto-tech divide

General Motors reported Q2 adjusted EPS of $3.57, beating consensus by 14 percent, while Mobileye's results pointed to a cooling autonomous driving market.

"Solid execution and disciplined pricing drove the beat," GM management said, citing the company's 16th consecutive earnings surprise.

Revenue reached $48 billion, up 1.9 percent year over year and 3 percent above consensus. GM raised its full-year adjusted EBIT guidance to $14 billion to $16 billion, its second upgrade this year, and lifted adjusted EPS guidance to $12 to $14. The adjusted automotive free cash flow forecast was raised to $9.5 billion to $11.5 billion.

The results highlight GM's pricing discipline in North America, where adjusted EBIT margins recovered to 8.6 percent in the quarter. But tariff exposure of $2.5 billion to $3.5 billion and EV restructuring costs of nearly $11 billion since the second half of 2025 temper the outlook.

GM's North American operations generated adjusted EBIT margin of 9.3 percent in the first half, returning to management's target range of 8 percent to 10 percent. The company generated $6.3 billion in adjusted automotive free cash flow in the first six months and returned $2.8 billion through share repurchases.

Software revenue is becoming a larger contributor. GM expects software-related recognized revenue to exceed $3 billion this year, with deferred revenue approaching $7.5 billion. OnStar subscriptions continue to grow, and Super Cruise is expanding across more vehicle models.

The company faces headwinds from tariffs, commodity inflation and rising onshoring costs. Commodity inflation, including logistics, is expected to total $1.2 billion to $1.7 billion in 2026. Capital spending of $10 billion to $12 billion this year also reduces financial flexibility.

Mobileye, the autonomous driving technology company, reported results that contrasted with GM's upbeat picture. The company's outlook reflected slower-than-expected adoption of advanced driver-assistance systems, suggesting the path to full autonomy remains longer than many investors anticipated.

GM shares rose about 5 percent following the release. The stock trades at 5.8 times forward earnings, a discount to Ford and a fraction of Tesla's valuation.

The guidance raise signals GM expects its truck franchise and software business to drive continued earnings growth. Investors will watch the next-generation Chevrolet Silverado and GMC Sierra launches in the coming quarters for signs of margin expansion.

This article is for informational purposes only and does not constitute investment advice.