AXON and the Future of Policing: Demolition Man or Disruption Play?

This is an exclusive CNBC Pro article, made available to our clients courtesy of Todd Gordon, Founder of Inside Edge Capital. In this piece, Todd shares his forward-looking take on Axon Enterprises (AXON) – a company transforming modern policing through AI and non-lethal tech. This article was originally written for CNBC and is shared here for educational and insight purposes, with permission.

I hope this comparison resonates but when looking at the future of law enforcement envisioned by Rick Smith, CEO of Axon Enterprises, I can’t help but think of the 1993 Sylverster Stallone Movie “Demolition Man”. In that movie created 32 years ago they portray a more civilized society where police utilize non-lethal, AI-like systems, and surveillance-driven technologies to maintain order. The movie portrays violent, lethal manners of containment as a crude relic of the past. Granted many personal freedoms are encroached upon in that movie and that’s where the comparison ends. But AXON is designing a more balanced, ethical, and technology-driven approach to law enforcement that should be embraced by both sides of the political aisle. We own AXON in our Tactical Alpha Growth and Active Opps portfolio at Inside Edge Capital and will be looking to increase our size in AXON.

The company, formerly Taser International, has offerings in non-lethal weaponry, vehicle surveillance, systems to improve police force productivity, decision support, and real-time operations utilizing artificial intelligence, as well as drone technology that act as first responders. To make one more fundamental case of how Axon can improve productivity, the company claims police officers spend 40% of their time on paperwork. Axon has solutions to utilize AI so officers can spend more time in the field and less time behind a desk. If you’re interested to learn more, go check out this video on the company website: https://www.axon.com/ai

AXON recently broke out on the weekly chart from the $700 / $720 resistance zone that should now be considered support. Provided the stock does not break back below $690, I see a potential move towards the upper end of the dashed parallel channel into the $900’s.

Looking at the annual revenue and EPS figures below the chart, topline revenues have been growing steadily, but you’ll see a ‘shocking’ (bad joke, I know) 2025 EPS drop of 75.21%. Those 2025 projected EPS numbers of $1.19 are GAAP earnings. The expected non-GAAP earnings for all of 2025 are $6.11 compared to $5.94 for 2024. Looking ahead to 2026 expected non-GAAP earnings are 7.50 for a 22.7% growth rate. As shown on the chart, 2026 GAAP earnings are expected to regain a growth trajectory by 116.39% to $2.58 in EPS.

The discrepancy between GAAP and non-GAAP comes from the company CEO Rick Smith’s policy of aggressive long-term compensation plan tied to performance goals. The company issues aggressive equity-based incentives to employees to attempt to hit those goals. Another reason for the discrepancy according to company resorts is when Axon acquires another company, intangible assets like software or patents are amortized in GAAP, but excluded from non-GAAP.

Moving down to the daily chart we see AXON has carved out a “bull flag” consolidation pattern above the newly formed support zone and today we are extending higher. 50-day average volume in AXON is 609K shares so to help confirm the breakout I would like to see a few 700K+ share days.

In our Active Opps portfolio (linked below) we hold a 4.02% allocation. After publishing this article I’m looking to increase the holding to approximately 5-6% of the portfolio. In our slightly less aggressive, but still growth-oriented model Tactical Alpha Growth, we hold a 1% allocation established on August 28th, 2024 that we’re also looking to increase. If you look back to that time frame you’ll see a similar bull flag technical pattern (red arrow) that set up the breakout into the $400’s.

In closing, AXON is not trying to create a utopian overreach society like Demolition Man, but I think it is trying to take the best parts of non-lethal policing, officer accountability and efficiency, deterrent systems, all utilizing AI technologies. This name likely remains in our portfolios for the foreseeable future.

-Todd Gordon, Founder of Inside Edge Capital, LLC
We offer active portfolio management and regular subscriber updates like the idea presented above in our Active Opps service:

(DISCLOSURES: Gordon owns AXON personally and in his wealth management company Inside Edge Capital. Charts shown are Deepvue )