Axon (AXON) stock was one of 2024’s major winners. Shares of the nonlethal weapons company posted a scorching 167% return for the year, and the stock joined the Nasdaq-100, an influential index of the 100 largest non-financial stocks listed on the tech-centric Nasdaq (NDX) exchange. But Axon has slumped out of the gate in 2025, and shares are now down 19.9% from their 52-week high.
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Is it time to buy the dip on this once high-flying stock? Personally, I’m bullish on Axon due to its diversified and growing suite of products and offerings, its history as a long-term winner, and the tremendous global opportunities it still has ahead of it.
What Is Axon?
Axon is best known for the TASER stun guns it provides to law enforcement officers, but there is much more to the company than just these nonlethal weapons. Axon also makes the body cameras worn by police officers and fleet cameras deployed in police vehicles. In addition, the company is home to a growing cloud software business, Axon Cloud, which is used to manage digital evidence, boost productivity, and support real-time operations.
Axon has also forayed into drones and drone defense, acquiring Sky Hero, a maker of uncrewed aerial vehicles (UAVs) and uncrewed ground vehicles (UGVs) in 2023. It also purchased airspace security provider Dedrone in 2024. While it is still early innings for both of these businesses, the timing of these acquisitions could prove prescient as interest in drones among the general public (and awareness of the potential threats they can pose) has skyrocketed following a spate of mysterious drone sightings in the skies above New Jersey in December 2024.
Complementary Products that Create a Flywheel Effect
What I really like about Axon’s suite of products and services is that they are complementary and create a flywheel effect. For example, Axon can get its foot in the door with a local or state law enforcement agency through its TASER guns or body cameras. It can then cross-sell and upsell these customers on the benefits of storing the footage from these body cameras on Axon Cloud or using its Draft One AI tool to help write police reports.
During the third quarter of 2024, the company reported stellar net revenue retention of 123%, indicating that customers are renewing their contracts with Axon and purchasing additional products, leading them to increase their spending from the prior year. Strong net revenue retention is often viewed as the sign of a great software stock, and Axon is exhibiting it.
Axon is also attractive because as more customers begin using its cloud, its revenue will become increasingly subscription-based over time. Subscription revenue is attractive, given its recurring, predictable nature. In 2019, 73% of Axon’s revenue was subscription-based, and by 2023, this percentage increased to 95%.
Long-Term Winner
Axon’s 167% gain in 2024 was certainly impressive, but strong returns are nothing new for this long-term winner. In fact, over the past 10 years, Axon has generated an incredible total return of 2,063%. Indeed, shares traded for $25.23 a decade ago and are worth $565.85 today, representing a monumental return for long-term Axon shareholders.
The company is now much bigger than it was back then, so with a market cap of $43.8 billion, it may be difficult to generate these same levels of returns going forward, but Axon is clearly a long-term winner that has outperformed the market over the past 10 years, which gives me confidence that it will eventually bounce back from the current correction and return to winning ways.
Vast Opportunity Ahead
While Axon has racked up incredible long-term gains, the company is, in many ways, just scratching the surface of its long-term potential. For example, while TASER has reached 35% market penetration in the U.S., it only enjoys 3% penetration in Europe, 1% in Latin America, and 0% in Asia, with each of these markets representing a massive opportunity for Axon going forward. Similarly, body cameras have reached 14% penetration in the U.S., versus just 1% in Europe, 1% in Latin America, and 2% in Asia.
But perhaps the biggest area of growth potential is Axon Cloud. The company says Axon Cloud has reached 4% penetration in the U.S., meaning there is ample runway ahead in its home market. In addition, there are plenty of international opportunities as the software suite has 0% penetration in Europe, Latin America, or Asia.
It is worth noting that the company generated $1.94 billion in revenue over the trailing 12 months, but it believes that between these various products and geographic markets, its total addressable market is currently $77 billion, meaning that there is plenty of green space ahead.
Well-Suited for the Current Climate
In many ways, Axon is well-positioned to handle any economic environment. Axon’s sales are not driven by consumer demand, so in the event of an economic downturn, demand for its products should be fairly resilient. Axon primarily sells its products to law enforcement agencies and points out that even when GDP dips, spending on public safety remains stable or increases, as it did during the financial crisis of 2008 and 2009.
Plus, Axon may find itself well-suited to the current political environment with Donald Trump set to become President on January 20. Rising crime and a return to law and order were major themes of Trump’s platform, and Trump has frequently sought to position himself as a staunch supporter of law enforcement. Therefore, it’s hard to imagine that a Trump presidency will be bad for a company like Axon that serves this community.
Valuation Is the Key Risk
Axon is a great company, so the primary risk for Axon investors today is that after 2024’s run, shares are richly valued, even when accounting for the recent pullback. Shares trade at 89.8 times consensus 2025 earnings estimates and 16.8 times 2025 sales estimates. This type of valuation is likely unsustainable over time, and these high expectations put the stock at risk of a further pullback if it disappoints the market with future results.
That said, the company is firing on all cylinders and growing at a rapid rate — during the most recent quarter, it grew revenue by 32% year-over-year, continuing a trend of long-term growth. If it keeps executing on its expansion plans, it should be able to outpace analyst estimates and grow into this valuation over time.
Is AXON Stock a Buy, According to Analysts?
Turning to Wall Street, AXON earns a Strong Buy consensus rating based on 13 Buy ratings assigned in the past three months. Furthermore, the average analyst AXON stock price target of $622.92 per share implies 9.3% upside potential from current levels.
Overall, I’m bullish on Axon based on its compelling suite of complementary products and services, and the significant growth opportunities it still has ahead of it. The stock has been a major winner over the past decade, but there is plenty of potential upside ahead. This is the type of business I want exposure to over the long term, and I view the temporary weakness in shares as an attractive opportunity for investors who have been waiting to get on board this long-term winner.
