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Adobe Inc. (ADBE) vs International Business Machines Corporation (IBM): Which Is the Better Buy in 2026?

As of 2026-08-03, ADBE is undervalued at $250, with a DCF intrinsic value of $554 and a margin of safety of 55%. IBM is fairly valued at $224, with an intrinsic value of $240 and a margin of safety of 7%. Of the two, ADBE has the wider margin of safety.

ADBE
Adobe Inc.
$250.41
VS
IBM
International Business Machines Corporation
$223.65

Rewards

ADBE
  • ★Adobe Inc. has maintained ROIC above 15% for 4 consecutive years, indicating a durable competitive advantage.
  • ★Gross margin of 89.4% indicates strong pricing power — typical of businesses with significant intellectual property or brand strength.
  • ★Adobe Inc. scores 100/100 on the Economic Moat Score (Wide Moat), with roic consistency as the strongest competitive dimension.
IBM
  • ★International Business Machines Corporation scores 79/100 on the Economic Moat Score (Wide Moat), with revenue predictability as the strongest competitive dimension.
  • ★Free cash flow has grown at a 10.6% CAGR over the past 4 years, demonstrating strong earnings power growth.
  • ★Each dollar of retained earnings has created $18.41 of earning power — management is an exceptional capital allocator.

Risks

ADBE
    IBM
    • ⚠Despite buyback spending, shares outstanding increased in 3 out of 4 years — stock-based compensation is offsetting repurchases.
    • ⚠FCF yield of 5.7% suggests reasonable valuation assuming continued moderate growth.
    • ⚠PEG ratio of 2.27 indicates the stock is expensive relative to its expected growth — the market may be pricing in more growth than analysts project.

    Key Valuation Metrics

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    ADBE
    IBM
    Valuation
    $9.22B
    Free Cash Flow
    $12.05B
    9.26%
    FCF Yield
    5.72%
    14.33
    Trailing P/E
    19.88
    9.11
    Forward P/E
    16.98
    Quality & Moat
    37.82%
    ROIC
    9.05%
    62.95%
    ROE
    34.46%
    89.40%
    Gross Margin
    58.10%
    0.68
    PEG Ratio
    2.27
    Balance Sheet Safety
    0.13
    Net Debt / Equity
    1.65
    N/A
    Interest Coverage
    N/A
    0.15
    Net Debt / EBITDA
    3.47
    0.00%
    Dividend Yield
    3.02%
    ADBE: 9Ties: 1IBM: 2
    ADBEIBM

    Historical Fundamentals

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    ADBE

    Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.

    IBM

    Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.

    Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.

    $1 Retained Earnings Test

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    ADBE
    $-0.60
    created per $1 retained over 3 years
    Market Cap Declined
    Σ Retained
    $18.12B
    Δ Market Cap
    $-10.93B
    Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
    > $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
    IBM
    $26.41
    created per $1 retained over 3 years
    Exceptional Value Creator
    Σ Retained
    $5.68B
    Δ Market Cap
    +$149.88B
    Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
    > $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer

    Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
    > $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer

    Discounted Cash Flow (DCF) Analysis

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    ADBE
    54.8% Margin of Safety
    Price is 54.8% below estimated fair value
    Current Price: $250.41
    Fair Value: $553.74
    Strongly undervalued
    Undervalued
    Fairly valued
    Overvalued
    Strongly overvalued
    IBM
    6.9% Margin of Safety
    Price is 6.9% below estimated fair value
    Current Price: $223.65
    Fair Value: $240.11
    Strongly undervalued
    Undervalued
    Fairly valued
    Overvalued
    Strongly overvalued

    Reverse DCF — Market-Implied Growth

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    ADBE

    What growth rate is the market pricing in at $250?

    +1.8%
    Market-Implied Owner Earnings Growth
    Standard FCF implies -0.6%

    The market implies +1.8% Owner Earnings growth, below historical trends — potential opportunity.

    Standard FCF implies a more demanding -0.6%, reflecting heavy growth investment expected to generate future returns.

    IBM

    What growth rate is the market pricing in at $224?

    +7.2%
    Market-Implied Owner Earnings Growth
    Standard FCF implies +9.2%

    The market implies +7.2% Owner Earnings growth, below historical trends — potential opportunity.

    Standard FCF implies a more demanding +9.2%, reflecting heavy growth investment expected to generate future returns.

    Economic Moat Score

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    ADBE
    100/100
    Wide Moat
    70+ Wide · 40-69 Narrow · <40 None

    Wide moat with strength across all dimensions. ROIC Consistency is the standout factor.

    Composite score measuring competitive advantage durability across four dimensions: returns above cost of capital, pricing power stability, revenue predictability, and capital efficiency. Based on 4 years of fundamental data.
    IBM
    79/100
    Wide Moat
    70+ Wide · 40-69 Narrow · <40 None

    Wide moat driven primarily by revenue predictability. ROIC Consistency is the area most vulnerable to competitive pressure.

    Composite score measuring competitive advantage durability across four dimensions: returns above cost of capital, pricing power stability, revenue predictability, and capital efficiency. Based on 4 years of fundamental data.

    Forensic Accounting

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    ADBE
    -2.85
    Unlikely Manipulator
    Above -1.78 = likely manipulator · -2.22 to -1.78 = grey zone

    M-Score Trend

    Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.
    IBM
    -2.39
    Unlikely Manipulator
    Above -1.78 = likely manipulator · -2.22 to -1.78 = grey zone

    M-Score Trend

    Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.

    Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.

    Ownership Breakdown

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    ADBE
    Insiders 0.2%Institutions 87.8%Retail & Other 12.0%
    No. of Institutional Holders3,051
    High insider ownership aligns management incentives with shareholders — a key signal in Buffett-style analysis. Institutional concentration can indicate smart-money conviction but also crowding risk.
    IBM
    Insiders 0.1%Institutions 65.5%Retail & Other 34.4%
    No. of Institutional Holders4,401
    High insider ownership aligns management incentives with shareholders — a key signal in Buffett-style analysis. Institutional concentration can indicate smart-money conviction but also crowding risk.

    High insider ownership aligns management incentives with shareholders. Institutional concentration can indicate smart-money conviction but also crowding risk.

    Insider Buying Activity

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    ADBE
    1
    Buys (3M)
    1
    Buys (12M)
    Total value (12M): $1.95M
    RICKS DAVID A
    Director
    $1.95M
    @ $194.51 · 2026-06-25
    DURN DANIEL JAMES
    Chief Financial Officer
    $507,758
    @ $390.58 · 2025-03-20
    RICKS DAVID A
    Director
    $998,946
    @ $443.98 · 2025-01-28
    Open market purchases · includes direct & indirect ownership · excludes option exercises
    IBM
    0
    Buys (3M)
    3
    Buys (12M)
    Total value (12M): $417,155
    MIEBACH MICHAEL
    Director
    $101,264
    @ $233.33 · 2026-02-25
    HOWARD MICHELLE J.
    Director
    $11,891
    @ $237.82 · 2026-02-25
    FARR DAVID N
    Director
    $304,000
    @ $304.00 · 2026-01-30
    FARR DAVID N
    Director
    $298,800
    @ $249.00 · 2025-02-28
    ZOLLAR ALFRED W
    Director
    $197,139
    @ $210.62 · 2024-11-13
    Open market purchases · includes direct & indirect ownership · excludes option exercises

    Open market purchases · includes direct & indirect ownership · excludes option exercises.

    Insider Selling Activity

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    ADBE
    0
    Sells (3M)
    4
    Sells (12M)
    Total value (12M): $1.05M
    FORUSZ JILLIAN
    Officer
    $185,915
    @ $246.25 · 2026-04-30
    DURN DANIEL JAMES
    Chief Financial Officer
    $331,355
    @ $248.02 · 2026-04-20
    DURN DANIEL JAMES
    Chief Financial Officer
    $485,323
    @ $294.85 · 2026-01-27
    FORUSZ JILLIAN
    Officer
    $50,344
    @ $337.88 · 2025-10-31
    FORUSZ JILLIAN
    Officer
    $175,828
    @ $380.58 · 2025-05-02
    FORUSZ JILLIAN
    Officer
    $145,567
    @ $435.83 · 2025-01-28
    BELSKY SCOTT K
    Officer
    $2.05M
    @ $431.61 · 2025-01-27
    BANSE AMY L
    Director
    $333,300
    @ $550.00 · 2024-12-06
    FORUSZ JILLIAN
    Officer
    $327,987
    @ $485.19 · 2024-10-29
    BELSKY SCOTT K
    Officer
    $232,525
    @ $483.42 · 2024-10-25
    BELSKY SCOTT K
    Officer
    $1.14M
    @ $511.48 · 2024-10-16
    DURN DANIEL JAMES
    Chief Financial Officer
    $3.35M
    @ $515.44 · 2024-09-17
    Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives
    IBM
    0
    Sells (3M)
    0
    Sells (12M)
    THOMAS ROBERT DAVID
    Officer
    $6.72M
    @ $253.01 · 2025-03-03
    LAMOREAUX NICKLE JACLYN
    Officer
    $774,727
    @ $215.20 · 2024-11-08
    Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives

    Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives.

    🎭 Mr. Market's Mood

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    ADBE
    FearGreed
    😨Fear(39/100)

    "Market is pessimistic — investigate whether fears are temporary or structural"

    Composite sentiment score based on 6 market signals. Inspired by Buffett's "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.
    IBM
    FearGreed
    😨Fear(29/100)

    "Market is pessimistic — investigate whether fears are temporary or structural"

    Composite sentiment score based on 6 market signals. Inspired by Buffett's "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.

    Composite sentiment score based on market signals. Inspired by Buffett’s "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.

    ⚖️ Buffett Signal

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    ADBE
    ⚪Awaiting DCF Data

    The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.

    DCF Margin of Safety: N/AMr. Market's Mood: Fear (39)
    IBM
    ⚪Awaiting DCF Data

    The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.

    DCF Margin of Safety: N/AMr. Market's Mood: Fear (29)
    View ADBE Full AnalysisView IBM Full Analysis

    Frequently Asked Questions: ADBE vs IBM

    Is Adobe Inc. or International Business Machines Corporation more undervalued in 2026?▼

    Based on our discounted cash flow model, ADBE trades at a 54.8% margin of safety (intrinsic value $554 vs. price $250), compared to IBM's 6.9% margin of safety (intrinsic $240 vs. $224).

    Which stock has a wider economic moat, Adobe Inc. or International Business Machines Corporation?▼

    ADBE scores 100/100 (Wide moat), while IBM scores 79/100 (Wide moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.

    Which company has better free cash flow, Adobe Inc. or International Business Machines Corporation?▼

    Adobe Inc. (ADBE) generates a 9.3% free cash flow yield, compared to International Business Machines Corporation's 5.7%. A higher FCF yield means the business converts more of its market value into cash that can be returned to shareholders or reinvested.

    Which stock has higher return on invested capital, Adobe Inc. or International Business Machines Corporation?▼

    ADBE earns 37.8% ROIC versus IBM's 9.0%. A higher ROIC means the company generates more profit per dollar of capital employed, a hallmark of durable competitive advantage in Buffett-style analysis.