Commonwealth Bank of Australia (ASX: CBA) shares ripped to a new record high of $172.92, up 1.87%, on Friday.

CBA shares are now trading at a price-to-earnings (P/E) ratio of 27.29x.

This contrasts dramatically with its big four peers, which are trading at 12.52x for Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares, 15.61x for Westpac Banking Corporation (ASX: WBC) shares, and 15.82x for National Australia Bank Ltd (ASX: NAB) shares.

Can CBA shares keep rising? Or is this a case of 'irrational exuberance' with a price plunge just around the corner?

Here's what some of the experts say.

Where to next for CBA shares?

There are 17 analysts on the CommSec platform covering CBA shares.

Their consensus rating is a strong sell, with 10 analysts recommending a strong sell, three a moderate sell, and two saying hold.

Macquarie published a new note on CBA shares this week following the bank releasing its 3Q FY25 update.

The broker has an underperform rating on Australia's biggest ASX 200 bank stock with a 12-month price target of $105.

That implies a near-40% potential downside over the next year.

Macquarie describes CBA as "expensive", commenting:

While the valuation is difficult to justify, in the context of the earnings growth profile CBA continues to outperform its peers.

CBA delivered a solid 3Q25 trading update. Pre-provision earnings were marginally ahead of expectations, rising ~1% QoQ, underpinned by stable margins and robust volume growth. We forecast CBA's pre-provision profits to rise ~2% in 2H25.

Macquarie thinks CBA is best placed to cope with lower interest rates ahead, with the Reserve Bank expected to cut next Tuesday.

Similar to peers, we have reviewed our estimate of sensitivity of margins to lower rates. We estimate CBA will face a 9bps headwind from unhedged deposits and mix shift (vs peers 5-8bps) to FY27, but this will be offset by 10bps of tailwinds from the replicating portfolio (vs peers 1-6bps).

The combined effect leaves them with a 1bp tailwind, well ahead of WBC (-7bps) and marginally better than ANZ/NAB (0bps), despite facing more downside to deposit margins.

While there are no near-term catalysts in play to bring the share price down, the broker says today's valuation is fundamentally unjustified.

Damien Nguyen from Morgans says CBA is a high-quality business, but its shares are trading at a "significant premium" to their peers.

On The Bull, Nguyen said:

While it delivers strong dividends and has a solid brand, it's facing the same macro risks as other banks — rising bad debts, slowing credit growth and margin pressure from interest rate changes.

The high valuation leaves little room for upside and makes it vulnerable to any earnings disappointment.

For investors who have enjoyed strong returns, it may be a good time to lock in gains and reduce exposure.

What should you do?

With so many experts saying CBA shares are trading too high, it's hard to ignore that advice.

At the same time though, market sentiment is often not rational, and it's pretty clear that investors are loving CBA shares right now.

Many analysts have pointed out that CBA may be rising by default through the boom in exchange-traded fund (ETF) investing.

CBA holds a prime position in many ASX ETFs because it's the No. 1 stock by market capitalisation in S&P/ASX 200 Index (ASX: XJO) or S&P/ASX 300 Index (ASX: XKO) based ETFs.

As more investors pile into ASX ETFs holding CBA stock, this places ongoing upward pressure on the price.

The CBA share price is now up by more than 70% over the past two years.

If you're keen to lock in some of this phenomenal capital gain, but you're also concerned that if you sell too soon you'll miss out on more gains that may be ahead, you might like to consider a stop-loss order.

This is a risk management tool whereby you can pre-set a sell price if CBA shares were to commence a significant downward decline.