Excitement is peaking at Axon Enterprise (AXON), the company behind TASERs, security body cameras, and cutting-edge cloud software for public safety. Earlier this week, the company published stellar earnings results, helping the stock to repeat history, almost to the day.
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On August 6th, 2024, the company reported better-than-expected earnings of $1.15 per share and immediately spiked higher on the news, before consolidating its gains in the weeks ahead. Judging by the stock’s reaction to this year’s figures so far this week, it would seem AXON’s upward trend remains intact.
AXON’s latest Q2 report hit like a bombshell, sending the stock up 17% since Monday and pushing its gain to ~150% over the past year.
With accelerating top-line growth and surging profitability, Axon is leveraging AI and exceptional customer retention to strengthen its grip on a recession-resistant industry. While the valuation is undeniably rich, this is a unique business—one that rarely, if ever, trades at a discount. That’s why AXON remains one of my largest holdings.
Revenue Growth Keeps Punching Above 30%
Axon’s Q2 revenue clocked in at $669 million, a 33% jump from last year. Not only did this mark the sixth consecutive quarter of above 30% revenue growth, but in fact, it accelerated from Q1’s already impressive 31% clip. The software and services segment was the star of the show, up 39% to $292 million, fueled by premium digital evidence management and new AI tools like auto-transcription.
Management emphasized strong demand for TASER 10 and Axon Body 4 as well, with platform solutions like counter-drone tech growing 86%. AI’s integration is streamlining police workflows, saving 6-12 hours per officer weekly, and with annual recurring revenue (ARR) hitting $1.2 billion, up 39%, this growth train’s got serious momentum.
International expansion, particularly in Europe, and enterprise customer wins are also juicing numbers. In the post-earnings call, CEO Rick Smith discussed their “product-led flywheel,” where new products drive subscriptions, which in turn drive more innovation.
AI’s role here is enormous, as tools like Draft One and live translation are boosting adoption, and with $10 billion in future contracted bookings, Axon’s growth looks locked in for years. Then you have new tools like Evidence Translation and Smart Capture that are set to roll out, and make Axon’s ecosystem even stickier. Evidently, with a net revenue retention rate of 124%, customers aren’t just renewing their subscriptions, but they’re spending more year after year.
Margin Expansion Fuels Profit Powerhouse
Profitability-wise, Axon’s adjusted EBITDA hit $172 million in Q2, up 37%, with a margin of 25.7%, beating expectations. Management credited higher revenue and operating leverage, but the real magic seems to be in the product mix. Software and services, with a 75.6% gross margin, grew way faster than hardware, offsetting lower device margins from newer products like counter-drone systems.
AXON’s management commented in the earnings call that AI-driven efficiencies, like video auditing and real-time operations tools, are raising margins by cutting manual work. This focus on high-margin software helped adjusted net income reach $174 million, driving EPS to $2.12, well above analyst estimates. Earlier, Axon had flagged tariffs as a potential margin hit, but it seems they are easily absorbing those costs while still targeting a 25% adjusted EBITDA margin for the year.
AXON Stock Valuation Remains Pricey Yet Justified
Axon’s current valuation is eye-watering. Trading at a P/S of 25 and a P/E of 131 based on 2025’s projected $2.72 billion revenue and $6.60 EPS, this is easily one of the most expensive stocks in the market.
However, the truth is that Axon has been trading at these lofty multiples for years, and time after time it has delivered. With revenue growth showing no signs of slowing and AI efficiencies kicking in, I’m not betting on multiple contractions anytime soon.
Then you have to think of Axon’s monopoly-like grip on public safety tech (TASERs, body cams, and cloud software), on top of operating in a recession-proof space. Police budgets don’t decline in downturns, and Axon’s ecosystem is sticky, with customers locked into long-term contracts.
At the same time, AI is set to supercharge profitability, potentially shrinking that P/E as EPS grows faster than the stock price. I would argue that a run to $1,000 per share, which would imply a P/S near 30, might raise eyebrows, but for a business this dominant, it’s not crazy.
What is the Price Target for AXON in 2025?
There are 16 analysts offering price targets on AXON stock via TipRanks, with an overwhelming bullish consensus. Currently, the stock carries a Strong Buy consensus rating based on 15 Buy and one Hold ratings over the past three months. No analyst rates the stock a sell. AXON’s average stock price target of $857.07 implies less than 1% downside over the next twelve months.
However, Wall Street has yet to update its post-earnings estimates, which will likely move higher after such a strong beat.
Time to Back AXON as a Generational Compounder
At the end of the day, Axon is doing what top-tier companies do: beating growth expectations, widening margins, and securing long-term customers with essential technology. Sure, the valuation may look toppy and extreme through a traditional lens—but with AI amplifying its model and public safety spending proving recession-proof, AXON’s fundamentals remain rock-solid. I’m not trimming a single share because I believe it’s wiser to add to generational compounders—history shows the market usually ends up playing catch-up to their long-term potential.