Axon Enterprise Stock Is Down 35% From Its Highs. Here’s Why 22% Annualized Upside Through 2027 Is Still on the Table

Key Stats for AXON Stock

• Past week’s performance: Axon shares have traded roughly flat after sliding about 35% from their 12‑month high as investors wait for the next earnings catalyst
• 52-week range: $396 to $885
• Valuation model target price: $624
• Implied upside: 45.4% over 1.9 years

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What Happened?

Axon Enterprise (AXON) stock has been under pressure in recent months, trading about 50% below its late‑2025 highs as investors rotated out of high‑multiple growth names. The slide followed a strong multi‑year run in which the shares climbed from below $20 a decade ago to an all‑time peak above $700, so profit‑taking and higher interest‑rate expectations have weighed on sentiment.

However, Axon’s recent fundamentals remain solid. In its most recent reported quarter, revenue grew roughly 31% year over year to about $711 million, with software and services up more than 40% as agencies adopted its cloud platform and digital‑evidence tools.

Importantly, the company has continued to win multi‑year contracts and expand internationally. It ended the quarter with more than $2 billion in cash and over $11 billion in contracted future revenue, which gives it a strong financial cushion. As a result, the recent stock weakness reflects valuation and macro concerns more than any deterioration in Axon’s core business.

During the latest week, trading action remained relatively muted because investors focused on Axon’s upcoming fourth‑quarter 2025 earnings report scheduled for February 24, 2026.

Consensus calls for another quarter of roughly 30% revenue growth and healthy profitability, so the key question is whether management’s 2026 guidance can support those expectations while the company continues to invest heavily in product development and acquisitions.

Recent deals for emergency‑communications and real‑time‑intelligence platforms, including Prepared and Carbyne, have added to operating expenses but also broadened Axon’s addressable market beyond core conducted‑energy devices and body cameras.

With no negative company‑specific news this week, the stock’s flat performance largely reflects a “wait and see” stance ahead of earnings rather than a shift in the underlying outlook.

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Is AXON Stock Undervalued?

Under valuation model assumptions realized through 2028, the stock is modeled using:

• Revenue growth (CAGR): 27.2%
• Operating margins: 5.7%
• Exit P/E multiple: 62.2x

Based on these inputs, the model estimates a target price of $624, implying 45.4% total upside from the current share price and a 22% annualized return over the next 1.9 years.

Those projected returns sit well above the 10% annual threshold that usually signals an attractive setup, so the model suggests Axon still offers meaningful long‑term upside even after a big run over the past decade.

For that potential to be realized, Axon needs to sustain high‑20s revenue growth, improve profitability from low‑single‑digit operating margins, and maintain a premium earnings multiple despite rising competition and ongoing investment.

Execution will hinge on continued expansion of its cloud software platform, growing international demand for cameras and TASER devices, and successful integration of recent acquisitions that extend its public‑safety ecosystem.

If these drivers hold, the current pullback could look like a valuation reset rather than a change in the long‑term story, but upcoming earnings and guidance will be critical in determining whether the stock can move back toward the model’s fair‑value estimate

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