Axon Surged After Earnings and Is Still Down Over 50% From Highs

Summary

After getting beaten down for the better part of a year, Axon Enterprise NASDAQ: AXON scored a big win after its last earnings report. Shares surged by nearly 11% following the firm’s May release, with the company posting impressive sales, earnings, and guidance. Axon Enterprise Today$394.05 -0.31 (-0.08%) As of 02:30 PM Eastern This is a fair market value price provided by Massive. Learn more.52-Week Range$339.01▼$885.91P/E Ratio158.25Price Target$712.75Get Axon Enterprise alerts:Sign Up Nonetheless, the defense stock is down big time, still trading at less than 50% of its 52-week high reached in August 2025. Some of this fall was likely justified, but other aspects are much more questionable. At past highs, Axon traded at a forward price-to-earnings ratio (P/E) near 130x; evident of a company “priced for perfection." However, the stock has also sunk amid fears of artificial intelligence in the software industry. This comes even though hardware sales play a critical role in Axon’s business and make its flywheel effect work. When push comes to shove, Axon’s results show why there is a lot of room for optimism around this name going forward. Axon’s Beat and Raise Q1In Q1 2026, Axon reported revenue of $807.3 million, good for a growth rate of 34% year over year (YOY). This very handily beat estimates of $778.9 million. Meanwhile, adjusted earnings per share (EPS) rose by just under 10% to $1.61, a slight beat over expectations of $1.60. Notably, gross margins took a meaningful hit, leading to revenue growing much faster than adjusted EPS. Gross margin fell by 150 basis points YOY to 59.1%, with the company noting global tariffs as the primary driver. This is another legitimate factor hurting Axon stock, being a persistent talking point on earnings calls. Despite this, the company maintained its full-year adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin guidance of 25.5%. Axon also raised its full-year revenue growth guidance to...