Is Adobe, Inc. overvalued or undervalued?

As of 17 October 2025, the valuation grade for Adobe, Inc. has moved from expensive to attractive, indicating a shift in perception regarding its market value. Based on the current metrics, Adobe appears to be undervalued, with a P/E ratio of 35, a Price to Book Value of 18.41, and an EV to EBITDA of 26.66. In comparison to its peers, Adobe's P/E ratio of 29.80 is lower than Microsoft Corp.'s 36.17 and Oracle Corp.'s 51.69, suggesting it may offer better value relative to these competitors.
Despite the attractive valuation, Adobe's recent stock performance has lagged behind the S&P 500, with a year-to-date return of -25.06% compared to the index's 13.30%. This underperformance over multiple periods, including a 1-year return of -32.92% versus 14.08% for the S&P 500, reinforces the notion that while the company may be undervalued, market sentiment has not yet aligned with its intrinsic value.