Tesla TSLA), the domestic EV market leader, saw its stock dip 3% in Thursday’s trading session after reporting favorable Q1 results yesterday evening, but announced that its CapEx will be about $5 billion higher than initially expected this year.
Meanwhile, General Motors GM) has held down the second spot in the U.S. EV market and is scheduled to report its Q1 results next Tuesday, April 28.
Recovering some early morning losses that appeared to be influenced by Tesla’s post-earnings selloff, GM stock ended today’s trading session down 0.61%.
The conversation about which auto giant may be the better investment is stirring up, with both of their stocks producing impressive gains of more than 120% in the last three years.
As potential buy-the-dip targets, Tesla shares have now fallen 17% year to date, with GM down 3%.
Image Source: Zacks Investment Research
Tesla’s Q1 Highlights
Higher automotive revenue, including increased full self-driving (FSD) subscriptions, and stronger average vehicle pricing drove Tesla’s Q1 sales up 16% year over year to $22.38 billion while eclipsing estimates of $21.92 billion.
Notably, Tesla reported 1.28 million active FSD users, a 51% YoY increase. These subscriptions contributed meaningfully to Tesla's services revenue, helping offset weaker EV unit sales.
Supporting Tesla’s margins were manufacturing and supply-chain cost reductions, with Q1 EPS of $0.41 beating expectations of $0.36 and rising from $0.27 per share a year ago. That said, the largest contribution to Tesla’s Q1 profitability was highlighted as one-time accounting benefits related to warranties and tariff refunds.
It’s noteworthy that Tesla generated $1 billion in free cash flow (FCF) during the quarter after posting negative FCF in Q4 2025 for the first time in several years. However, Tesla advised that FCF could be volatile for the rest of 2026 due to AI and robotics spending.
GM’s Q1 Expectations
Next week, Wall Street is looking for solid but slightly lower profits and revenue from GM, and clues about its software growth, EV strategy, and tariff impact.
According to the Zacks Consensus, analysts expect GM’s Q1 sales to be down nearly 1% YoY to $43.67 billion with quarterly EPS expected to fall 7% to $2.59.
These contractions reflect softer global auto demand and lingering pricing pressure, as GM has been one of the hardest hit automakers regarding rising tariff costs. GM's Q1 tax impact is estimated at up to $1 billion due to its heavy reliance on imported components that are more exposed to new and existing U.S. trade barriers.
Still, GM’s software business could start to be a growth driver with OnStar, its connected services and safety platform reaching 12 million subscribers. Super Cruise has seen expanding adoption as well, which is GM’s hands-free driver-assistant technology that uses OnStar connectivity for real-time positioning, map updates, and system functionality.
The Choice Between Tesla & GM Stock
Investors are generally more enthusiastic about Tesla’s reach outside of the auto industry, including in energy generation and storage, AI infrastructure, robotics, and insurance services.
To that point, automakers operate in a low-margin, capital-intensive business environment, with Tesla and GM’s return on invested capital (ROIC) at 4%, respectively, although this is notably above their Zacks Automotive-Domestic Industry average of 1.47%.
Image Source: Zacks Investment Research
Broadly speaking, the often preferred ROIC is 20% or higher. Nevertheless, they are more efficient than their automaker peers at using capital to generate profits. Furthermore, Tesla’s EPS is currently expected to increase over 20% this year to $2.02, with GM’s annual earnings projected to rise 17% to $12.44 per share.
Of course, the rift that draws value investors is that GM stock still trades at just 6X forward earnings, while Tesla sits at a stretched 101X, driven by its future exposure to higher-margin businesses. At the moment, Tesla and GM stock both land a Zacks Rank #3 (Hold).
Image Source: Zacks Investment Research
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
General Motors Company (GM): Free Stock Analysis Report
Tesla, Inc. (TSLA): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).