Axon rated 'buy' for strong growth and AI-driven platform transformation despite short-term margin pressure

Analyst Amrita Roy initiates a 'buy' rating on Axon, citing its promising risk-reward profile and growth potential in Connected Devices and Software & Services. Axon's AI Era Plan is transforming it into a full-stack public safety platform, boosting recurring revenue and average revenue per user. Although short-term margins and free cash flow face pressure, these are seen as temporary, with management targeting a 28% adjusted EBITDA margin by fiscal year 2028. Revenue guidance for FY26 was raised to 30-32% growth, and consensus expects Axon to surpass its $6 billion revenue target by FY28.