Axon’s AI Era Revenue Jumped Nearly 700%. Here’s What’s Behind It

Key Stats for AXON Stock

• Past two weeks performance: +3.9%
• 52-week range: $339 to $794
• Valuation model target price: $714
• Implied upside: 13.7% over 2.4 years

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A Guidance Raise Meets a Margin Trade-Off

Axon Enterprise (AXON) just posted its 10th straight quarter of 30%+ revenue growth. Revenue climbed 35% year over year to $904 million. That beat the $877 million analysts expected. Adjusted EPS came in at $1.88, ahead of the $1.85 estimate.

Management didn’t stop at meeting expectations. Full-year revenue growth guidance moved up to a range of 32% to 34%, a 200 basis point lift from before. That confidence traces back to booming demand for Axon’s newer software and AI products. But the quarter wasn’t flawless, because gross margin slipped 40 basis points to 62.9% on a heavier services mix.

Investors seem willing to look past that trade-off. AI Era revenue jumped almost 700% year over year. Platform Solutions revenue rose 123% to $150 million. Dedrone crossed $100 million in trailing 12-month revenue, up from single digits a year ago.

Body camera shipments should surge 20% to 30% sequentially in the third quarter. Public safety wins and international expansion are driving that jump, not the new Axon Body Mini, which is still in early trials. If Axon stock keeps climbing on this kind of execution, the market will likely keep rewarding growth over near-term margin purity.

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Is Axon Stock Still Undervalued at These Levels?

Under valuation model assumptions realized through 12/31/28, the stock is modeled using:

• Revenue Growth (CAGR): 30.8%
• Operating Margins: 6.0%
• Exit P/E Multiple: 69.9x

Based on these inputs, the model estimates a target price of $714, implying 13.7% total upside from the current share price of $628 and an annualized return of 5.6% over the next 2.4 years.

That 5.6% annualized return sits below the 9% to 15% range investors usually see as attractive. Axon trades near 70x forward earnings, so there’s little room for stumbles. Still, the growth engine behind that multiple looks real, since AI Era and Platform Solutions revenue are both scaling fast.

Margins remain the swing factor here. The model’s operating margin assumption of just 6.0% reflects heavy investment in new products and a services-heavy mix. If that mix normalizes as AI and software scale, margin expansion could lift the stock’s return profile toward the moderately attractive range.

Axon’s forward P/E sits below its own 52-week high multiple, but well above legacy hardware peers. That gap only makes sense if growth holds near the raised guidance range. So the valuation isn’t cheap, yet it isn’t disconnected from the story driving it either. Peer comparisons below add more context.

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How Axon Stacks Up Against Motorola Solutions

Axon’s closest public comparison is Motorola Solutions (MSI), which sells communications and video security tools to many of the same public safety customers. Motorola posted second-quarter revenue growth of 13% to $3.13 billion. Software and services revenue rose 10%, and management just raised full-year 2026 guidance to roughly $12.98 billion. That’s a much larger base, but growth runs slower than Axon’s.

Valuation tells the real story. Motorola trades near 24.6x forward earnings, while Axon’s NTM P/E sits closer to 70x. That’s nearly triple the multiple for a company posting single-digit growth compared to Axon’s 30%+ pace. The market is pricing Axon like a hypergrowth software name and Motorola like a steady, cash-generative hardware business.

Margins currently favor Motorola. Its gross margin runs around 51%, and its record $15.6 billion software backlog gives it predictable earnings power. Axon’s LTM gross margin is higher at 59.5%, but its operating margin remains thin at just 1.7%, since the company keeps reinvesting in growth. Both stocks trade rich versus their own history, but for different reasons entirely.

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What’s Driving AXON Stock Going Forward?

Q3 earnings in early November mark the next real test. Axon needs to prove the 32% to 34% growth guidance holds and that body camera shipments deliver the promised jump. A miss on either front would raise doubts about the raised outlook.

AI Era and Platform Solutions revenue remain the key growth levers to watch. They’re compounding far faster than the base body camera business. If Dedrone keeps scaling past its $100 million run rate, that mix shift could eventually support margin recovery.

Margin trends deserve close attention too. Gross margin fell 40 basis points this quarter, so any stabilization would ease pressure on the stock’s premium multiple. Management has pointed to services mix and memory costs as the main drags, and relief on either front would help.

International and federal expansion, along with competitor win-backs, give the growth story more than one leg to stand on. Because of that breadth, the raised guidance could prove conservative rather than aggressive.

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Should You Invest in Axon?

The only way to really know is to look at the numbers yourself. TIKR gives you free access to the same institutional-quality financial data that professional analysts use to answer exactly that question.

Pull up AXON, and you’ll see years of historical financials, what Wall Street analysts expect for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down.

You can build a free watchlist to track AXON alongside every other stock on your radar. No credit card required. Just the data you need to decide for yourself.

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!