Microsoft Corporation (MSFT) vs Nasdaq, Inc. (NDAQ): Which Is the Better Buy in 2026?
As of 2026-11-01, MSFT is undervalued at $522, with a DCF intrinsic value of $802 and a margin of safety of 35%. NDAQ is fairly valued at $106, with an intrinsic value of $107 and a margin of safety of 1%. Of the two, MSFT has the wider margin of safety.
Rewards
- ★Microsoft Corporation has maintained ROIC above 15% for 4 consecutive years, indicating a durable competitive advantage.
- ★Gross margin of 67.7% indicates strong pricing power — typical of businesses with significant intellectual property or brand strength.
- ★Microsoft Corporation scores 84/100 on the Economic Moat Score (Wide Moat), with revenue predictability as the strongest competitive dimension.
- ★Gross margin of 100.0% indicates strong pricing power — typical of businesses with significant intellectual property or brand strength.
- ★Each dollar of retained earnings has created $4.31 of earning power — management is an exceptional capital allocator.
Risks
- ⚠FCF yield of 1.7% is below 3%, meaning the market is pricing in substantial future growth to justify the current price.
- ⚠5 insider sales totaling $75.4M with no purchases in the past 3 months — insiders are reducing their exposure.
- ⚠Share count has increased by 16% over the past 4 years, diluting existing shareholders.
- ⚠10 insider sales totaling $3.4M with no purchases in the past 3 months — insiders are reducing their exposure.
Key Valuation Metrics
Learn more →Historical Fundamentals
Learn more →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.
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
Learn more →> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
> $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
Learn more →Reverse DCF — Market-Implied Growth
Learn more →What growth rate is the market pricing in at $522?
The market implies +13.0% Owner Earnings growth, below historical trends — potential opportunity.
Standard FCF implies a more demanding +22.5%, reflecting heavy growth investment expected to generate future returns.
What growth rate is the market pricing in at $106?
The market implies +13.9% Owner Earnings growth, below historical trends — potential opportunity.
Standard FCF implies a more demanding +14.0%, reflecting heavy growth investment expected to generate future returns.
Economic Moat Score
Learn more →Wide moat driven primarily by revenue predictability. Reinvestment Efficiency is the area most vulnerable to competitive pressure.
Narrow moat with reinvestment efficiency as the key competitive advantage. Improving roic consistency would strengthen the moat.
Forensic Accounting
Learn more →M-Score Trend
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.
Ownership Breakdown
Learn more →High insider ownership aligns management incentives with shareholders. Institutional concentration can indicate smart-money conviction but also crowding risk.
Insider Buying Activity
Learn more →Open market purchases · includes direct & indirect ownership · excludes option exercises.
Insider Selling Activity
Learn more →Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives.
🎭 Mr. Market's Mood
Learn more →"Market is pricing this stock without strong emotion in either direction"
"Market is optimistic — be cautious and ensure you have a margin of safety"
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
Learn more →The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
Frequently Asked Questions: MSFT vs NDAQ
Is Microsoft Corporation or Nasdaq, Inc. more undervalued in 2026?▼
Based on our discounted cash flow model, MSFT trades at a 34.9% margin of safety (intrinsic value $802 vs. price $522), compared to NDAQ's 1.1% margin of safety (intrinsic $107 vs. $106).
Which stock has a wider economic moat, Microsoft Corporation or Nasdaq, Inc.?▼
MSFT scores 84/100 (Wide moat), while NDAQ scores 60/100 (Narrow moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.
Is Nasdaq, Inc. in financial distress?▼
NDAQ's Altman Z-Score of 2.7 places it in the Grey zone, signaling elevated bankruptcy risk. MSFT scores 9.1 (Safe zone). The Altman Z-Score is a five-factor model that predicts insolvency within two years; scores below 1.81 indicate significant distress.
Which company has better free cash flow, Microsoft Corporation or Nasdaq, Inc.?▼
Nasdaq, Inc. (NDAQ) generates a 3.6% free cash flow yield, compared to Microsoft Corporation's 1.7%. 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, Microsoft Corporation or Nasdaq, Inc.?▼
MSFT earns 22.5% ROIC versus NDAQ's 10.8%. A higher ROIC means the company generates more profit per dollar of capital employed, a hallmark of durable competitive advantage in Buffett-style analysis.
Which dividend is safer, Microsoft Corporation's or Nasdaq, Inc.'s?▼
MSFT's dividend earns a safety score of 94/100 (Very Safe), compared to NDAQ's 91/100 (Very Safe). MSFT has raised its dividend for 3 consecutive years.