Is Axon (AXON) Stock a Buy in 2026?

After more than doubling in 2024, Axon Enterprise (NASDAQ: AXON) stock lost 4% in 2025. But it continues to perform well, and the company has robust long-term opportunities.

Let's see what to expect in 2026 and whether or not this is an opportunity to buy on the dip.

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What's happening at Axon right now

Axon makes products that use technology to drive public safety. It has a line of innovative devices as well as a growing cloud-based platform that connects hardware and software. It's best known for the Taser, which police forces use to subdue suspects. It has sold more than 1 million Tasers, and its goal is to cut police-related deaths by 50% by 2033. It continues to roll out new products that enhance public safety and improve user workflows, and it has carved out a niche in this white space where there's plenty of opportunity for more.

The company is still growing quickly, and sales increased 31% year over year in the third quarter. Profitability has been less consistent, and Axon reported a small operating loss in the quarter, along with a $2 million net loss. That's mostly coming from expenses related to investing in its continued growth. Aside from the third quarter, it has reported positive net income for years.

One of the features that makes Axon so compelling is its long-term contracts and recurring revenue. Axon is a lot more than Tasers, and when clients buy into its ecosystem, they're making a long-term investment in critical infrastructure. That's a high barrier to entry for any competition. Annual recurring revenue increased 41% over last year in the third quarter to $1.3 billion, and the company ended the quarter with $11.4 billion in future contracted bookings.

Should you buy Axon stock?

Axon stock trades at a forward one-year P/E ratio of 61 and a price-to-free-cash-flow ratio of 329. That's quite pricey, even for a high-growth stock with strong long-term opportunities. That's certainly part of why the stock performed poorly last year; that's a premium valuation to carry. However, the company can justify a premium valuation because of its excellent performance and long-term opportunities.

Even at the lower price Axon doesn't look like a bargain. If you have a long-term horizon, you can buy and hold at this price, but you might want to use a dollar-cost-averaging strategy to benefit from better entry points at different times.

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Axon Enterprise. The Motley Fool has a disclosure policy.