Honestly, if you've spent more than five minutes looking at the Commonwealth Bank of Australia stock lately, you've probably noticed something weird. The numbers just don't seem to make sense to the traditional "value" investor. We are sitting here in January 2026, and CBA is trading at roughly $152.88 a share. That is a massive number. It puts the bank’s price-to-earnings (P/E) ratio at about 25x.
To put that in perspective, most global banks are lucky to see a P/E in the low teens. So, why is everyone still paying a 45% premium over its peers like ANZ or Westpac?
It's a bit of a head-scratcher. On one hand, you have every single analyst on CMC Markets—all nine of them—screaming "Sell." They look at a target price of around $125 and see a bubble. On the other hand, CBA just added $4.6 billion to its mortgage book in a single month last November. It’s like the bank is playing a completely different game than the rest of the Big Four.
The Mortgage Moat and the Macquarie Threat
The core of the Commonwealth Bank of Australia stock story is, and always has been, home loans. They are the 800-pound gorilla. Currently, they hold about 25% of the entire Australian residential mortgage market. That is $611.5 billion in loans.
But there’s a fly in the ointment. Macquarie Bank.
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Macquarie has been absolutely tearing it up, growing their mortgage book by nearly 24% over the last year. While CBA is still the king, the "Big Four" dominance is slipping. Six years ago, the majors held over 78% of the market; today, that's down to about 73.6%.
You can't ignore the RBA either. Governor Michelle Bullock has been pretty blunt about not seeing rate cuts on the horizon for 2026. In fact, there’s talk of rate hikes. If we see two more hikes this year, the average borrower’s capacity drops by about $24,000. That’s a direct hit to the volume of new loans CBA can churn out.
Why the Valuation Refuses to Die
You’d think with "Sell" ratings across the board, the price would have collapsed by now. It hasn't. Why?
Basically, it's the "safe haven" effect. When the ASX gets volatile, investors run to CBA like it’s a government bond with a better dividend. Speaking of dividends, the current yield is sitting around 3.1% to 3.2% (roughly $4.85 per share annually). If you factor in those juicy franking credits, the grossed-up yield is closer to 4.3%.
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It's not "get rich quick" money, but for a retiree in Sydney or a super fund, it's predictable.
The AI Wildcard
Here is something most people aren't talking about: Ranil Boteju. He’s starting as the new Chief AI Officer early this year.
CBA is betting the house on tech. They aren't just a bank anymore; they are trying to be a tech company that happens to lend money. They are spending billions on IT to lower their cost-to-income ratio. If they can automate the boring stuff better than NAB or ANZ, that 25x P/E might actually start to look justified.
But man, IT inflation is real. Wages for developers and cloud vendor costs are eating into those margins. In the first quarter of FY26, cash profit was $2.6 billion—which sounds great until you realize it’s only 1% higher than the previous half-year average.
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What the 2026 Forecast Actually Looks Like
If you’re holding Commonwealth Bank of Australia stock, you need to be realistic about the capital growth. Most analysts, including those at Morgan Stanley, are flagging that bank returns are going to diverge wildly this year. They think CBA might face some serious headwinds because it's just so expensive compared to its earnings growth.
We are looking at a predicted price range between $125 and $147 over the next few months. It's a "falling trend" according to the technical analysts at StockInvest.
- Market Cap: Holding steady around $256 billion.
- Dividend: Likely to see modest growth in FY26, but don't expect a miracle.
- Competition: Intense. Not just from the majors, but from "un-banks" and digital disruptors.
The Bottom Line for Investors
If you are looking for a stock that’s going to double in 2026, this isn't it. CBA is a "steady as she goes" play that is currently priced for perfection.
The smartest move right now? Don't just look at the ticker price. Watch the RBA’s February meeting and the bank’s half-year results on February 11, 2026. That’s when we’ll see if those mortgage margins are actually holding up against the "deposit switching" trend where customers are moving money out of low-interest accounts into high-yield ones.
Keep an eye on the $153.22 support level. If it breaks below that significantly, the "Sell" crowd might finally get their wish, and we could see a slide toward that $125 mark. But for now, the Australian obsession with the Big Blue Diamond keeps the floor higher than any textbook says it should be.
Check your portfolio's exposure to the banking sector specifically. If you're over-leveraged in the Big Four, it might be time to look at diversifying into some of the mid-cap growth stocks or even the debt markets where CBA is actually leading the league tables. Always check the franking status of your dividends before the end of the financial year to maximize that 4.3% effective yield.