Adobe (NASDAQ:ADBE) and Microsoft (NASDAQ:MSFT) were both once considered aging tech giants that were running out of room to grow. However, both companies have generated fresh growth in recent years by transforming many desktop software products into cloud-based subscription services.

Adobe bundled its flagship software products, including Photoshop, Illustrator, Premiere Pro, and After Effects, into subscription-based cloud services. It also built a cloud-based portfolio of marketing, analytics, and e-commerce tools for enterprise customers.

Microsoft bundled together its Office productivity software into its cloud-based Office 365 suite, which generated stable subscription revenue instead of relying on periodic upgrades. It also aggressively expanded Azure into the world's second-largest cloud infrastructure after Amazon Web Services (AWS).

Cloud-based services running on a laptop.

Image source: Getty Images.

Adobe's cloud-based expansion started in 2013 under CEO Shantanu Narayen, who has led the company since 2007. Microsoft's cloud-based rebirth started in 2014 after CEO Satya Nadella took the helm. Both companies' bold cloud strategies initially dented their earnings growth, but patient investors are now sitting on some big gains.

Over the past six years, Adobe's stock surged more than 500% as Microsoft's stock advanced over 360%. The NASDAQ advanced just 140% during the same period. It might be tempting to take profits after those multi-bagger gains, but let's take a fresh look at both tech giants and see which stock has more room to run.

How fast is Adobe growing?

Adobe's revenue rose 24% to $11.2 billion in fiscal 2019, which ended on Nov. 29, and its adjusted earnings grew 16%.

Its business is split between the Digital Media unit, which includes its Creative and Document cloud services, and the Digital Experience segment, which provides enterprise-facing services. Both segments generated double-digit sales growth throughout the year.

In the first half of 2020, Adobe's revenue rose 16% year-over-year to $6.2 billion, as the stable growth of the digital media segment largely offset a pandemic-induced slowdown in its digital experience unit. Despite that pressure, its adjusted EPS -- buoyed by buybacks -- rose 33%.

Adobe expects its third-quarter revenue and earnings to rise 11% and 17%, respectively, but declined to offer any full-year guidance in light of the COVID-19 crisis. Analysts expect its revenue to rise 14%, with 24% earnings growth for the full year. Adobe's core business remains healthy, but its growth is decelerating, and its stock isn't cheap at 44 times forward earnings.

How fast is Microsoft growing?

Microsoft's revenue rose 13% to $143 billion in fiscal 2020, which ended on June 30, as its adjusted earnings improved 14%.

An illustration of a "digital" cloud representing cloud computing.

Image source: Getty Images.

Microsoft's sprawling business is split into three segments: Productivity and Business Processes, which serves productivity software like Office and Dynamics; the Intelligent Cloud, which includes Azure and its server products; and More Personal Computing, which sells its Windows licenses, Xbox consoles and games, and Surface devices.

The COVID-19 crisis mainly impacted its Productivity and Business Processes segment, which struggled with lower enterprise spending. However, the crisis generated tailwinds for its cloud, Windows, and gaming businesses, which all benefited from stay-at-home and remote work measures.

Microsoft's guidance calls for 8%-9% annual sales growth in the first quarter of 2021, but it didn't provide any bottom-line guidance. Analysts expect its revenue and earnings to rise 10% and 12%, respectively, for the full year -- which are fairly low growth rates compared to its forward P/E of 31.

The winner: Microsoft

Adobe and Microsoft are both great growth stocks, but Microsoft is the slightly better pick, for two reasons.

First, Microsoft is better diversified across the consumer and enterprise markets. Adobe's Digital Experience business is heavily exposed to a slowdown in enterprise spending, and its Digital Media unit could struggle with softer spending in the pandemic-stricken media industries.

Microsoft is also exposed to macro headwinds, but the growth of Azure, rebounding demand for PCs, and the launch of new Xbox consoles and Surface devices later this year could all offset its weaknesses.

Second, Microsoft trades at a lower multiple and pays a forward dividend yield of 1%. Adobe is pricier relative to its growth and doesn't pay a dividend. Both tech stocks still have plenty of room to run under their visionary CEOs, but Microsoft remains the better all-around play for this wobbly market.