GM Just Announced a $20 Billion Buyback. Tesla Trades at 350 Times Earnings. Here's Which Auto Stock I'd Buy Today.
Key Points
General Motors authorized up to $20 billion in share buybacks.
Tesla offers more upside potential with its side bets, but also significant risk and uncertainty.
- Motley Fool Issues Rare "Total Conviction" Buy Alert ›
Tesla (NASDAQ: TSLA) and General Motors (NYSE: GM) may seem light-years apart in how Wall Street views each automaker, but both are interesting stocks given what they can offer investors. If I had to choose just one to buy today, the answer isn't necessarily obvious. Let's have a deeper look.
GM is buying back shares
GM doesn't grab headlines like Tesla, but the legacy car and truck manufacturer is posting numbers that should attract buy-and-hold investors. On Oct. 20, GM released its third-quarter results, which showed revenue of $50 billion, a nearly 3% increase from last year. The company also approved a new $20 billion share buyback and increased its full-year guidance for adjusted automotive free cash flow to $11.5 billion to $12.5 billion.
Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
Wall Street wasn't overly impressed with GM's results. It instead focused on potential cost increases due to inflation and lingering electric-vehicle losses. I believe these fears are largely overblown, and there was more positive news for GM than negative with this report.
Image source: Getty Images.
Tesla's future is promising, but pricey
Tesla trades at a premium, but that's because Wall Street has high expectations for Elon Musk's company. Tesla delivered 486,532 vehicles in its latest quarter, beating analysts' expectations but down more than 2% from last year.
Investors in Tesla aren't paying for just EVs. They're investing in Tesla's robotaxis, Optimus, and full self-driving capabilities. It's a far more complicated and multifaceted manufacturer than GM or other legacy automakers.
Even with Tesla's falling net income, the stock is still trading at an incredible premium. Tesla's trailing price-to-earnings ratio is about 351, while its market cap is currently $1.5 trillion. Tesla is priced for perfection. An investment now could pay off, but there are real execution risks. There's also a lot of talk about Tesla potentially merging with Space Exploration Technologies (NASDAQ: SPCX) in the near future, which adds another layer of uncertainty to the stock.
If I had to choose today, I'd pick GM as the stock to buy. There's more risk and potential upside with Tesla, but GM is consistently profitable, buying back shares, and trading at a very reasonable price.
Should you buy stock in General Motors right now?
Before you buy stock in General Motors, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and General Motors wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $355,124!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,296,254!*
Now, it’s worth noting Stock Advisor’s total average return is 901% — a market-crushing outperformance compared to 210% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of October 25, 2026.
Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends General Motors. The Motley Fool has a disclosure policy.
Recommended Articles
