When you look at the top performers among S&P 500 stocks over the past 10 years, the top two names likely won’t surprise you.
That’s semiconductor titans Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD). They have 10-year total annualized returns of 77% and 57% respectively.
But the No. 3 stock isn’t a household name – Axon Enterprise (NASDAQ: AXON), which provides public safety operating systems, including hardware and software. It’s best known for its Taser stun guns and its body cameras. The stock has a 10-year annualized return of 42% and has doubled in the past 12 months.
You probably won’t be surprised to learn that Axon has strong earnings. Revenue jumped 33% in the second quarter from a year earlier, to $669 million. Profit fell to $36.1 million from $41.5 million. But the latest quarter included a stock-based compensation expense of $139 million, up from $75 million a year earlier.
Axon has a Software and Services segment, which includes a cloud-based software system enabling law enforcement to capture, store and manage video and other digital evidence. It also has a Connected Devices division, which includes the Tasers and body cameras. The company provides drone and counter-drone equipment, estimating the total addressable market for that sector at $20 billion.
Supporting factors
Several macro trends have helped spark Axon’s success. First, governments around the world are allocating more spending for public safety amid concern over crime, civil unrest and public security. Axon is especially appealing to safety agencies seeking non-lethal solutions. U.S. government spending on public safety totaled $504.9 billion in 2023, up 17% from three years earlier.
Government needs created by rising immigration enforcement also is helping Axon. The U.S. government will likely start asking for more information about immigration-enforcement products soon, Axon’s president Joshua Isner said in the company’s earnings call this month. “For us, that’s really centered around drone technology and maybe some Taser.”
Opportunity abounds overseas too. “There is a ton of need,” Axon CEO Patrick Smith said in the call. In Europe that stems from taking in a lot of immigrants and “now realizing they weren’t set up to integrate all those people,” he said. “They’re seeing surging social problems.
Increased security needs in the private sector also are boosting Axon. Corporate executives are at risk (recall the killing of a United Healthcare executive on the street in New York City). There are also issues of workplace safety, which can sometimes be addressed with cameras. And there’s asset protection, for energy pipelines for example.
Private security
The global private security market was valued at $235 billion as of 2023 and is seen hitting $385 billion by 2032, according to Fortune Business Insights.
All these trends are unlikely to change anytime soon, which should mean continued strong demand for Axon’s products. Only 14% of U.S. law enforcement agencies surveyed by Axon are fully-staffed, which could signal an increase in potential Axon-product users.
The company recently increased its full-year 2025 revenue estimate to a range of $2.65 billion-$2.73 billion from $2.6 billion-$2.7 billion previously. Revenue totaled $2.1 billion in 2024.
Of course, Axon is seeking to use artificial intelligence — in areas such as automated report generation and drone-based analytics.
“Axon’s diversified growth drivers, including international expansion and AI product adoption,” make it a winner, JPMorgan analyst Paul Chung wrote last month.
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