Shares of Canadian bank CIBC (TSX:CM) have really been blasting off over the past year, just like the rest of its peers in the Big Six basket. With the red-hot bank also surpassing the $100 billion milestone, I think it’s about time we start viewing CIBC as one of the leaders of the group.
Indeed, the stock has gained north of 110% in the past five years, putting the number-five bank close to the front of the pack in terms of performance. Despite the impressive surge, though, shares still look as cheap as ever, going for just 13.0 times trailing price to earnings (P/E) or 12.1 times forward P/E.
CIBC has been hot lately, but shares remain dirt cheap!
Though the great Canadian bank rally of 2025 has been going strong, there are some skeptics who think further gains could be harder to come by. A number of the big banking CEOs have sounded rather cautious after pulling the curtain on their latest quarterly results, which have ranged from good to absolutely fantastic. Indeed, the Canadian banks have always been well-equipped for a downturn. And while the Canadian economy may not be able to steer clear of an economic recession later this year, I don’t think the big banks will be moved by all too much.
A lot of things are going right for them, even if the Bank of Canada looks to continue chopping away at rates further, even if it means letting inflation inch higher. It’s hoped that such rates would jolt employment, but this time around, with the rise of artificial intelligence (AI), I’m unsure as to whether such a central bank tool will be able to get the job done. Either way, CIBC and the rest of the big banks seem to be hopping aboard that generative AI bandwagon.
CIBC’s AI could be a huge money saver!
Undoubtedly, CIBC has done a great job of bolstering its digital capabilities in recent years. As it looks to see what kind of value and efficiencies gen AI can unlock, I am encouraged by the potential for further multiple expansion in the shares, which seem to trail many of its peers in the Big Six right now. It’s tough to tell how such gen AI initiatives will unlock next-level margin growth.
Indeed, I’m a fan of management’s tech-savvy and think CIBC AI could not only save employees serious time, but also automate certain roles across the board. Earlier this year, it was reported that CIBC’s AI pilot helped save in the ballpark of 200,000 hours. Those are some serious savings that may go straight into the pockets of shareholders in the form of a dividend hike.
Indeed, the easier fruit may have already been grabbed, but when it comes to CIBC, I think that shares won’t slow down anytime soon, even if the Canadian economy does. Sure, CIBC or any other bank stock isn’t exactly something that comes to mind when one thinks of AI beneficiaries. However, as the AI revolution progresses, we’ll get to have a closer look at how such tech can save the big financials some big money.
