Commonwealth Bank of Australia (ASX: CBA) shares are up 0.47% for the day at $150.77 a piece, at the time of writing. For the year to date, the shares are down 6.42% and they're 5.34% below this time last year.
In 2025, CBA shares enjoyed a strong share price rally, peaking at an all-time high of $192 per share in June. But strong headwinds sent the share price plummeting.
This week, the banking giant dropped out of first place as the largest stock on the S&P/ASX 200 Index (ASX: XJO). BHP Group Ltd (ASX: BHP) shares crossed over $50 a share for the first time in more than a year yesterday. Although CBA stock is also in the green at the time of writing, BHP's move has pushed the miner to a market capitalisation of just over $253.5 billion. CBA is now in second place with a value of around $251.9 billion.
Now the question is, is it time to sell up? Or is there any upside ahead for CBA shares in 2026?
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CBA shares: Buy, hold, or sell for 2026?
I personally think CBA shares could crash below $100 this year. I'd look at potentially selling up before the downturn accelerates further.
Analysts are pessimistic about the outlook for CBA shares, too. TradingView data shows that 13 out of 15 analysts have a sell or strong sell rating on the banking giant. The average target price is $124.60, which implies a potential 17.18% downside at the time of writing.
But some think the share price could slump even lower to $99.81 a piece. That implies a 33.54% downside at the time of writing.
Why is sentiment so negative?
The issue is that CBA's share price is overvalued relative to its peers, and the bumper price tag isn't supported by the bank's earnings or business fundamentals. CBA's current price-to-earnings (P/E) ratio, at the time of writing, is 24.86, which is much higher (and therefore more expensive) than other major banks.
For comparison, ANZ Group Holdings Ltd (ASX: ANZ)'s P/E ratio is 18.43, National Australia Bank Ltd (ASX: NAB)'s P/E ratio is 19.18, and Westpac Banking Corp (ASX: WBC)'s P/E ratio is 19.43.
Not only is the valuation high, but CBA is facing ongoing net interest margin pressure from intense market competition in home lending and deposit products, as well as regulatory changes.
And not to mention, it looks like the Reserve Bank will keep the cash rate on hold for an extended period in 2026, or even hike rates. This puts even more pressure on banks to compete.
