Axon Enterprise, Inc.

(NASDAQ Global Select)
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Very Bullish +78

2 Tech Stocks That Could Help Make You a Fortune

AI-generated analysis

๐Ÿ“ˆ The digital advertising market is projected to exceed $950 billion by 2026, creating a massive opportunity for The Trade Desk (TTD).

๐Ÿ’ผ The Trade Desk operates on a customer-first ad-buying platform that retains over 95% of its customers annually.

๐Ÿ“‰ Despite strong fundamentals, TTD stock is trading at just 11 times this year's earnings estimate as it moves well off its highs.

๐Ÿš— Slowing growth in key sectors like consumer goods and auto has weighed on the stock, but management expects a tailwind from improving economic conditions.

๐Ÿค– Axon Enterprise (AXON) is evolving from a Taser manufacturer into an AI-driven law enforcement platform combining hardware and cloud software.

๐Ÿ“ฑ In Q4, Axon's total revenue surged 39% year-over-year to $797 million, with software revenue growing by 40%.

๐Ÿ’พ Axon's "data moat" comes from its ability to collect real-world data at scale to train AI products that solve specific agency problems.

๐Ÿš€ Bookings for Axon's AI-powered products nearly tripled last year to surpass $1 billion, signaling the start of a new growth phase.

๐Ÿ“… Management projects Axon's annual revenue will reach $6 billion by 2028 with an adjusted operating margin of 28%.

๐Ÿ”ฎ Analysts forecast Axon's earnings to grow at an annualized rate of 38% in the coming years despite current valuation concerns.

๐ŸŒ Axon plans to expand its market reach into enterprise, corrections, federal, and international sectors.

โš–๏ธ The stock is trading below previous peaks amid fears that AI could disrupt its cloud software, which analysts suggest may overlook Axon's competitive advantages.

๐Ÿ’ฐ Investors are looking for long-term growth in tech stocks with substantial potential as the sector historically delivers excellent returns.

๐Ÿ† The Motley Fool Stock Advisor team has highlighted these two stocks as key players in their fast-growing respective markets.

โš ๏ธ TTD is currently capturing a fraction of its $1 trillion addressable market, leaving ample room for future wealth-building returns.

Bullish Signals
  • Axon is building a powerful growth engine with AI-driven law enforcement tools combining hardware and cloud services, generating strong revenue.
  • In the fourth quarter, Axon's total revenue surged 39% year-over-year to $797 million, while software revenue specifically grew 40%.
  • Axon's annual recurring revenue reached $1.3 billion, growing 35%, supported by high-margin software and services that expand hardware customer relationships.
  • Bookings from Axon's AI-powered products nearly tripled last year to over $1 billion, indicating rapid adoption of its new technology stack.
  • The company has future contracted bookings topping $14 billion, providing clear visibility into long-term growth potential.
  • Management forecasts annual revenue reaching $6 billion by 2028 with adjusted operating margins expanding to 28%.
  • Analysts expect Axon's earnings to grow at an annualized rate of 38% in the coming years, fueling excellent long-term returns.
  • The digital advertising market is expected to exceed $950 billion in 2026, providing a massive opportunity for The Trade Desk to capture significant market share.
  • The Trade Desk retains more than 95% of its customers over the last 12 years due to its customer-centric ad-buying experience that prioritizes client needs.
  • Despite trading at just 11 times this year's earnings estimate, analysts forecast The Trade Desk to grow earnings at double-digit rates going forward.
Risk Factors
  • Slowing growth has negatively impacted The Trade Desk's stock price over the past year, attributed to weakness in consumer goods and auto sectors which represent 25% of its business.
  • Axon Enterprise faces significant headwinds from concerns that generative AI could disrupt its core cloud software offering, potentially eroding its competitive advantage.
  • The Trade Desk trades at a relatively low valuation of 11 times this year's earnings estimate despite double-digit earnings growth forecasts, indicating potential lack of market confidence compared to historical highs.
  • Axon Enterprise commands a high forward earnings multiple of 64, which may not be fully justified if its long-term revenue growth projections of $6 billion by 2028 are overstated or if margins fail to reach the anticipated 28%.
  • The Motley Fool Stock Advisor analyst team recently identified the top 10 best stocks for investors and notably excluded The Trade Desk from their list, suggesting a lack of immediate buy recommendation from influential analysts.
Full Analysis
The article highlights two technology stocks, The Trade Desk (TTD) and Axon Enterprise (AXON), as potential wealth-building opportunities for long-term investors focused on competitive positioning within the tech sector. The author argues that both companies are well-positioned in fast-growing marketsโ€”digital advertising for TTD and public safety with AI-driven tools for AXONโ€”and are currently trading at discounts relative to their historical highs or future potential. The piece notes that while digital ad spending is expected to exceed $950 billion by 2026, The Trade Desk has shown strong retention rates exceeding 95% over a decade and grew gross spending by 18% in the prior year despite some slowing growth due to weaknesses in consumer goods and auto sectors. Axon Enterprise is presented as having successfully evolved from selling hardware like Taser devices into a comprehensive software platform that integrates data from body cameras, drones, and cloud services. The company reported a 39% surge in total revenue to $797 million in the fourth quarter, with AI-powered product bookings nearly tripling to over $1 billion last year. Although concerns exist about AI disrupting its cloud offerings, the author emphasizes Axon's data moat derived from real-world collections used to train specialized AI products. Management has provided specific guidance expecting annual revenue to reach $6 billion by 2028 with adjusted operating margins of 28%, while future contracted bookings stand above $14 billion. The analysis suggests that patient investors could find value in these stocks despite current market sentiment, noting The Trade Desk trades at just 11 times this year's earnings and Axon is trading below its previous peak. However, the article concludes by directing readers to a promotional pitch for "Stock Advisor," a subscription service recommended by John Ballard of The Motley Fool, which identifies ten other stocks believed to outperform the market significantly, with TTD notably absent from that specific list despite being featured in this bullish analysis.