Is GM's new growth engine outside the auto business?

General Motors (GM) delivered another positive quarter for shareholders and raised its FY26 outlook a second time as resilient demand for its F-Series trucks and SUVs compensated for EV losses and lowered outlook for net income.

But the biggest surprise for Wall Street is the potential for GM’s non-core businesses, namely software and digital services, along with profitable opportunities in the defense industry.

In the second quarter, revenue generated from its OnStar business, including Super Cruise, was up 20% year-over-year and on pace to reach GM’s (GM) full-year growth target of $400M. This momentum is expected to continue into 2027, driving double-digit growth in revenue.  

“We are also building a select number of adjacent higher-margin businesses, including GM Defense and GM Insurance, in a capital-efficient manner that leverages our capabilities,” said CEO Mary Barra on the earnings call. “These businesses are modest contributors today, but we are optimistic about the long-term opportunities they present, and we’ll continue to share progress as they scale.”

Notably, these “new roads” could translate into significant gains for the business, says RBC Capital Markets’ analyst Tom Narayan.

“OnStar is the most mature non-legacy business with $3B+ in recognized revenue expected in 2026. We estimate OnStar’s implied EBIT at ~$1.95B, representing ~13% of GM’s $15B 2026 EBIT guidance midpoint—and this share could grow as Super Cruise penetration scales.”

“Software and services are an underappreciated growth driver,” agrees Morgan Stanley’s Andrew Percoco, along with GM’s Defense and Energy verticals, all of which are key opportunities for margin expansion and topline growth.

“We believe GM’s software and services business has the potential to drive a significant re-rating in the shares as the company accretes high-margin revenue through the P&L and continues to add disclosure around the outlook for this business,” Percoco writes.

For its legacy business, Narayan applauds GM’s durable pricing power and cost execution as the company “holds a commanding position in the most profitable segments of the U.S. auto market,” while Goldman Sachs’ Mark Delaney notes GM’s solid quarter and raised guidance come compliments of healthy dealer inventory levels and the new full-size pickup truck product cycle that will support growth. This even as Delaney predicts a relatively flat seasonally adjusted annual rate (SAAR) environment. 

“Despite our expectation for moderating 2026 US SAAR, we expect GM to manage through with an appropriately re-aligned capital allocation strategy and a refreshed product lineup highlighting strength in GM's core ICE trucks and SUVs,” Percoco adds.

GM (GM) shares are higher for a second day for a two-day gain of more than 8%.