Axon Enterprise vs. Chewy: Do Customers of Police or Pets Make One Stock a Better Buy in 2026?

Choosing between a high-growth technology powerhouse and a steady consumer leader requires a look at whether you prefer rapid innovation or predictable recurring revenue. Axon Enterprise Inc (NASDAQ:AXON) and Chewy Inc (NYSE:CHWY) offer very different paths.

Axon provides mission-critical hardware and software for law enforcement, making it a vital infrastructure play for public safety. Chewy dominates the digital pet supply market by focusing on high-frequency consumable goods. While their industries differ, both companies utilize technology to build deep competitive moats in their respective sectors.

The case for Axon Enterprise

Axon Enterprise operates as a leader among defense stocks by providing an integrated ecosystem of Taser energy devices, body-worn cameras, and cloud-based evidence management software. The company primarily serves federal, state, and local law enforcement agencies, but it is expanding its reach into fire, EMS, and commercial security markets. This strategy creates a sticky business model where hardware sales lead to long-term software subscriptions for data storage and analysis.

In FY 2025, revenue reached nearly $2.8 billion, representing a roughly a third increase over the prior year. The company reported net income of nearly $125 million, down from $377 million in 2024, resulting in a net margin of approximately 5% in 2025. This performance highlights the company's challenge of scaling its operations while maintaining positive returns for its shareholders.

As of its December 2025 balance sheet, the debt-to-equity ratio is roughly 0.6x, a metric comparing total debt to shareholder equity to show reliance on loans. Free cash flow for the period was nearly $75.1 million, though stock-based compensation represented roughly 300% of operating cash flow, meaning reported cash generation is heavily inflated by this non-cash add-back.

The case for Chewy

Chewy has built a massive e-commerce presence by specializing in pet food, medications, and supplies with a focus on its Autoship subscription program. This program provides customers with automatic deliveries, creating a reliable stream of recurring revenue that accounts for a large portion of total sales. Recently, the company has expanded into physical services by acquiring Modern Animal and opening its own Chewy Vet Care clinics to deepen its relationship with pet owners.

In FY 2025, revenue reached $12.6 billion, which was a 6% increase over the prior fiscal year. The company reported net income of $222.8 million, which resulted in a net margin of roughly 2%. While the growth rate is more modest than a tech-focused peer, the scale of the revenue reflects Chewy's massive footprint in the everyday lives of millions of pet parents.

As of its February 2026 balance sheet, the debt-to-equity ratio is approximately 1.1x, meaning total debt is slightly higher than shareholder equity. The current ratio is roughly 0.9x, which means the company has slightly fewer current assets than current liabilities. Free cash flow for the period was close to $562.4 million. Note that stock-based compensation (SBC) accounted for roughly 43% of operating cash flow, inflating reported cash generation, since SBC is a non-cash expense added back in the cash flow statement.

Risk profile comparison

Axon Enterprise faces risks related to its heavy concentration in the public safety sector, where demand can be influenced by political shifts and public perception of law enforcement. Cybersecurity is a major concern because the company stores sensitive digital evidence on its Axon Evidence platform, making it a target for attacks. Furthermore, the company relies on successfully integrating acquisitions like Carbyne and managing legal challenges, such as those regarding its Scottsdale expansion project.

Chewy operates in a fiercely competitive retail environment against giants like Amazon.com Inc (NASDAQ:AMZN) and Walmart Inc (NASDAQ:WMT). The company is currently managing legal and reputational risks following allegations of price-fixing in California. Additionally, Chewy depends on third-party infrastructure for its logistics and cloud services, specifically through Amazon. Expanding into physical veterinary clinics also introduces execution risks that differ from its core e-commerce expertise.

Valuation comparison

Axon Enterprise commands a much higher premium for its rapid growth, while Chewy offers a more conservative entry point based on its massive sales volume.

Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.

Which stock would I buy in 2026?

Axon Enterprise has a fine outlook for growth as law enforcement is increasingly equipped with Tasers and the public is becoming increasingly demanding that agents wear body cameras.

Expansion into Europe and Canada should also help, as should a focus on producing personal consumer-protection devices. In particular, all the data and video created by Axon customers have to be managed, and the company is seeing strong demand for its AI-based management systems from customers who find many of the services create efficiencies within their operations.

In its fiscal 2026, sales are seen growing well, up about a third to $3.7 billion, with net income of $275 million and free cash flow of $447 million, well over 2025’s levels.

Chewy, meanwhile, is establishing a steady growth pattern. In its most recently reported quarter, management noted that Autoship grew faster than overall sales, implying that many customers’ standing orders will continue to provide a solid base for the company. The company also believes that in the long run, veterinarian and general pet health services are a huge untapped market for Chewy. The business recently closed on the acquisition of Modern Animal, that brings a high level of profitability per location.

For fiscal 2026, sales are seen rising 7% to $13.5 billion, with net income up neatrly 50% to $333 million, accordiong to cosnensus analyst estimates.

With its much more reasonable forward P/E and P/S ratios, as well as a market serving dedicated pet owners, Chewy is the stock to buy in 2026.

Brendan Coffey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Axon Enterprise, Chewy, and Walmart. The Motley Fool has a disclosure policy.