AXON Stock Is Down 25% in 2026: Is the Selloff a Buying Opportunity?

Key Stats for Axon Enterprise Stock

• 52-Week Range: $339.01 – $885.92
• Current Price: $423.60
• Street Mean Target: ~$662
• TIKR Model Target: ~$1,160 at around 25% annualized IRR
• Q1 2026 Revenue: $807M (+34% YoY)
• Q1 2026 Adjusted EBITDA Margin: 25%
• ARR: $1.5B (+35% YoY)
• Net Revenue Retention: 125%

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What’s Actually Happening Here

Axon Enterprise started 2026 as one of the market’s favorite compounders, then fell nearly 57% from its January high to its April low. The culprit was not the business. Revenue grew 34% in the most recent quarter to $807 million, Adjusted EBITDA held at 25%, and the company raised its full-year revenue growth outlook to 30%-32%.

The sell-off was driven primarily by valuation compression across high-multiple software names amid fears of AI disruption sweeping the sector. One major fund manager called the market’s reaction to Axon specifically “misplaced.”

Axon Enterprise Drawdowns. (TIKR)

The stock has since partially recovered to around $424, still down about 25% year to date. The business kept compounding while the stock fell hard. That gap is exactly the kind of setup worth examining.

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The Software Machine Nobody Talks About

Most investors still think of Axon (AXON)  as the TASER company. That framing is increasingly outdated. Software and Services generated $355 million in revenue last quarter, up 35% year over year, and the software-only gross margin exceeds 80%.

The AI Era Plan, Axon’s bundled subscription that packages body camera software, cloud evidence management, and AI tools into a single contract, was described by company president Josh Isner as the fastest-selling product in the company’s history, generating nearly $1 billion in bookings to police agencies in its first year.

Draft One, one of the flagship AI tools, generates police reports automatically from body camera footage. Officers currently spend about 50% of their time on paperwork, and Draft One can reduce that to around 20%, effectively returning a full day of patrol time per officer per week. That productivity argument sells itself to budget-constrained municipalities. AI Era Plan product revenue was up over 700% year over year in the first quarter.

Axon Enterprise Total Revenues, EBITDA. (TIKR)

Revenue has grown from $863 million in 2021 to $2.78 billion in 2025, a pace few software companies can match. The GAAP EBITDA line appears to compress in recent years, but that figure is heavily distorted by stock-based compensation; Adjusted EBITDA for Q1 2026 alone came in at $202 million at a 25% margin, which tells a more accurate story about the underlying business.

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The Counter-Drone Wildcard

Axon acquired Dedrone, a counter-drone detection and mitigation platform, about 18 months ago, and it has quickly become one of the fastest-growing lines in the portfolio.

Counter-drone product revenue was up over 300% year over year, and a Drone as First Responder mission now launches approximately every 30 seconds in the United States. Dedrone bookings grew even faster, up around 500%, suggesting a meaningful revenue runway ahead.

The recently passed Safer Skies Act adds $250 million in federal grants and expands local agencies’ legal authority to detect, track, and neutralize drone threats. Prior to that legislation, many jurisdictions lacked the authority to actively mitigate drone activity, which constrained deployments.

World Cup host cities have already received federal waivers and are deploying Axon’s systems around stadiums. When those temporary authorizations become permanent, it opens the door to fixed installations at scale. The pipeline is large, and the revenue recognition is still early.

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What the Valuation Model Says

TIKR’s valuation model targets around $1,160 per share at roughly 25% annualized returns through end of 2030, based on mid-case assumptions of around 23% revenue growth and net income margins approaching 19%. The scenario range skews wide: the low case implies around 14% annualized returns, while the high case reaches 25%. The midpoint puts total return potential at around 175% over the next 4.5 years.

Axon Enterprise Valuation Model. (TIKR)

The Street is more conservative but still broadly bullish, with a consensus target around $662, implying roughly 56% upside from current levels. JPMorgan recently raised its target to $755. The bear case centers on valuation: even after the pullback, AXON trades at around 50x forward earnings, which leaves little room for execution stumbles.

Gross margins declined about 150 basis points year over year last quarter, driven by tariff headwinds and a heavier Dedrone hardware mix. The model’s return scenario is primarily driven by earnings growth rather than multiple expansion, which is the more durable path at these starting multiples.

The bull case is that AXON is not a hardware company priced like one. It is a recurring revenue platform with $14.3 billion in future contracted bookings, 125% net revenue retention, and AI products growing faster than any other line in the business. The scenario bet here is on durable platform economics at scale, not a near-term earnings catalyst.

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Should You Invest in Axon Enterprise?

TIKR gives you free access to the same institutional-grade financial data that professional analysts use to evaluate stocks like Axon. See what Wall Street expects for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down. Just like this article, the analysis starts with TIKR.

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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!