Tech stocks have been hit especially hard in the market downturn that started in early 2022. The Nasdaq Composite Index's losses roughly doubled the 8% decline in the S&P 500 in the past 12 months.

Sure, some of that slump makes sense given rising interest rates and the potential for a recession ahead. But those issues don't threaten the five-year outlook for industry-leading, highly profitable tech companies.

With that backdrop in mind, let's look at a few good reasons to take advantage of the stock market pullback to make long-term investments in Microsoft (MSFT 0.87%) and Adobe (ADBE -0.59%) shares.


There's little doubt that Microsoft will have a tough fiscal 2023. Sales in the second-quarter period rose just 2% as strong demand for its cloud services was offset by slumping sales in areas like PC and video game software. The tech giant is going through some major growth hangovers in these areas, which saw huge gains in earlier phases of the pandemic.

Yet Microsoft's financial strength is even more impressive in the context of this cyclical slowdown. The company generated $20.4 billion of operating income on $52.7 billion of revenue in Q2. That 39% profit margin puts it among the most profitable large companies on the market.

Microsoft was also able to send $10 billion of cash to shareholders through stock buybacks and a rising dividend in Q2. This flow of cash should cushion investors' returns while they hold this diverse growth stock through the industry ups and downs.


Adobe's business is setting sales and earnings records, but the stock is down significantly in the past year. That contrast can be explained by increasing fears that Adobe will issue a weak outlook in its next earnings update, slated for mid-March.

Patient investors can look past those short-term concerns toward Adobe's bright future. The software specialist is finding plenty of room to expand its customer base while boosting its service offerings. Revenue was up 15% in the last full year after accounting for currency exchange shifts, on top of huge gains a year earlier.

Adobe generated a record $7.8 billion of operating cash flow in fiscal 2022 as well, giving managment flexibility to continue investing heavily in growth initiatives even as many industry peers pulled back on spending.

The company's next earnings update might confirm that 2023 will be another year of slowing growth. Heading into the report, management is calling for annual sales gains of roughly 13%, compared to 15% in 2022 and a 23% spike in fiscal 2021.

That slump won't last forever, considering Adobe's dominant position in digital content production. In the meantime, investors can grab this stock at a huge discount. Its current valuation of 8.6 times annual sales is near the lowest that shareholders have seen in the past five years.

Sure, the next few quarters might be rocky for its industry. But Adobe is likely to lead its niche out of the slowdown when the inevitable rebound starts. That fact makes the stock an attractive one for growth-focused investors to consider owning here in early 2023.