Axon Enterprise vs. Figma: Do Tasers or Cloud Services Make for a Better Stock Buy for 2027?

Investors often compare hardware giants with software disruptors when looking for the next big growth story. Choosing between Axon Enterprise Inc. (NASDAQ:AXON) and Figma Inc. (NYSE:FIG) involves weighing physical safety infrastructure against digital design platforms.

Axon Enterprise leads the market for law enforcement technology, providing both hardware and cloud software solutions for agencies worldwide. Figma offers a cloud-based design platform that facilitates collaboration among product teams and developers. Both companies leverage cloud services to scale their businesses, but they operate in vastly different sectors with unique financial profiles.

The case for Axon Enterprise

Axon Enterprise provides hardware and software solutions primarily for public safety agencies, positioning it as a unique player among defense stocks. In its latest annual report, filed for the fiscal year ended Dec. 31, 2025, the company highlighted its integrated network of Taser devices and cloud software. Its primary customer vertical remains U.S. law enforcement, though it is expanding rapidly into international markets, federal agencies, and commercial enterprises.

In FY 2025, revenue reached around $2.8 billion, representing growth of approximately 33.5% compared to the prior year. The company reported net income of roughly $124.9 million, resulting in a net margin of close to 4.5%. This performance marks a decrease in net margin compared to the 18.1% reported in the previous fiscal year, reflecting changing operating costs.

As of its December 2025 balance sheet, the debt-to-equity ratio was approximately 0.6x. This ratio measures total debt against shareholder equity, where a lower number generally suggests a lighter debt load. The current ratio, which measures short-term liquidity, was about 2.5x while free cash flow reached around $75.1 million. Note that 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 Figma

Figma provides a collaborative, AI-powered platform used by teams to design and build digital experiences. According to its latest annual report, filed for the fiscal year ended Dec. 31, 2025, the company served approximately 2.9 million active customers. Its user base includes designers, developers, and product managers at large enterprises across financial services, healthcare, and other diverse global sectors.

For FY 2025, the company generated revenue of approximately $1.1 billion, which represents year-over-year growth of roughly 41%. Despite the strong top-line performance, it reported a net loss of about $1.3 billion for the period. This resulted in a net margin of approximately negative 118%, which is a deeper loss compared to the negative 98% net margin reported in the previous year.

According to its December 2025 balance sheet, the debt-to-equity ratio was close to 0.1x. This ratio compares total debt to shareholder equity, indicating the company maintains a very low debt profile relative to its equity. The current ratio was approximately 2.6x, and free cash flow reached around $246.2 million. Note that stock-based compensation represented roughly 544.2% of operating cash flow, meaning reported cash generation is heavily inflated by this non-cash add-back.

Risk profile comparison

Axon Enterprise faces significant dependence on U.S. law enforcement agencies and sales of its conducted energy devices. Susceptibility to negative publicity can affect its brand reputation and lengthen sales cycles with government entities. The company also deals with risks regarding artificial intelligence deployment and competition from Motorola Solutions (NYSE:MSI) and Tyler Technologies (NYSE:TYL).

Figma contends with intense competition from established technology companies and smaller start-ups alike. It relies heavily on Amazon.com Inc. (NASDAQ:AMZN) Web Services for platform hosting and faces potential fluctuations in results due to pricing changes. Cybersecurity risks and reliance on third-party models also pose threats, especially as it competes with Adobe Systems Inc. (NASDAQ:ADBE).

Valuation comparison

Axon Enterprise appears more attractively priced based on its Forward P/E using future earnings estimates, while Figma carries a lower P/S ratio relative to sales over the past twelve months.

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

Which stock would I buy for 2027?

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. Its cloud-based evidence control system is an increasingly sought-after service for law enforcement organizations.

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 fiscal 2026, sales are seen growing well, up about a third to $3.7 billion, with net income of around $290 million and free cash flow of $425 million, well over 2025's levels.

Figma, meanwhile, has seen its user experience design solution become the industry standard for digital asset and mobile application development. The company uses this niche dominance to introduce additional modules, helping transform it from a single-point solution into a full design platform.

One differentiator from competitors is that Figma has done an excellent job not only presenting itself to developers, but also to marketers and product managers who have to collaborate on designs. That gives the company more champions in an organization for its products.

For the current fiscal year, revenue should grow quickly, at about 39%, to $1.47 billion. Look for a dramatic reduction in its net loss, from nearly $1.3 billion to about $560 million. Wall Street still sees similarly sized losses ahead for the foreseeable future, however.

So which is the better buy for 2027? Axon's fast growth and profitability compare well against Figma and its net losses. Axon comes at a steep price, however, as judged by its ratios. But for long-term investors, the Taser maker is a good bet.

Brendan Coffey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Adobe, Amazon, Axon Enterprise, Figma, and Tyler Technologies. The Motley Fool recommends the following options: long January 2028 $330 calls on Adobe and short January 2028 $340 calls on Adobe. The Motley Fool has a disclosure policy.