Adobe's (ADBE 14.51%) suite of applications is a staple for everyone from global enterprises to freelance designers. That reach, and Adobe's ability to develop top-notch software-as-a-service apps, has helped make the stock a longtime winner for tech investors.

But lately, Adobe's share price has suffered amid a larger tech stock sell-off. Despite some of its recent setbacks, the cloud-based software giant is still worth owning and could continue to be a great long-term investment over the coming years. Here's why. 

A person using a computer.

Image source: Getty Images.

What's going wrong for Adobe right now 

Regarding investors' biggest concerns, it's worth looking a little closer at the company to better understand what's going on.

First, some have questioned whether or not Adobe should be spending $20 billion to buy the software design company Figma. It's a hefty price, especially when Adobe says that after the deal closes (which management expects will happen sometime in 2023), Figma's business will contribute just $400 million annually to Adobe's top line.  

That's not exactly an earth-shattering revenue contribution, especially given how much Adobe is paying for Sigma. Adobe is funding the purchase with a mix of cash and stock (including issuing some new shares).

Additionally, Adobe's annual sales growth has been slowing over the past few years, and some bears point to this as a key reason to avoid the stock right now. Finally, Adobe's share price has been hammered as inflation rises, and investors have grown increasingly concerned about a recession. The tech stock has plunged 38% over the past 12 months.  

What's going right for Adobe 

If all of the above is true, then why is Adobe still a buy? Some of these bearish signals for the stock must be put into context. For example, the Figma deal is certainly expensive, but buying the company helps Adobe maintain a competitive position in the cloud-based design software space.

Figma's gross margins of 90% are very high. If Adobe can successfully integrate Figma's services, it could make them more valuable and help the company maintain the high switching costs that keep users tied to its ecosystem.  

As for Adobe's slowing annual revenue growth, part of that was from unfavorable foreign exchange rates. On a constant-currency basis, total revenue in fiscal 2022 rose 15% to $17.6 billion.

It's also worth pointing out that Adobe's fiscal 2022 non-GAAP (adjusted) earnings increased 10% to $13.71 per share. That's solid growth, compared to many companies in the tech sector that have had a hard time generating earnings right now.  

The company issued strong guidance for fiscal 2023 as well. Management expects sales to increase 9% to $19.2 billion at the midpoint, equivalent to a 13% increase on a constant-currency basis. 

Adobe stock is a buy 

While Adobe's shares could experience some short-term volatility, the company's strong position in the software space continues to make the company a buy. Even if tougher economic times are ahead, most companies and individuals view the company's software as a must-have service and aren't likely to drop their subscriptions.

Finally, Adobe's shares are trading at 34 times the company's trailing earnings right now -- a premium to the tech sector's average of 25 -- but that valuation is much lower than the price-to-earnings ratio of 55 the stock reached this time last year. Adobe may not grow at quite the same pace it has in the past, but its strong position in the design software space still makes it a good long-term bet.