Now, these stocks could keep rising; the near-term fundamentals do look strong. However, with many of these names up more than 100% this year, I’m wondering if it might be smarter to focus on some of the AI stocks that have been left for dead?

A cheap Mag 7 stock

One high-quality AI stock that’s suffered recently is Microsoft (NASDAQ: MSFT). This year, it’s actually down despite all the AI hype.

Why’s it fallen? Because it’s a software business and investors don’t want a bar of software right now.

I think there could be an opportunity to consider here while the stock’s under pressure. In my view, it’s far too early to write this company off. Recent earnings were strong. For the quarter ended 31 March, revenue was up 15% year on year at constant currency.

Notably, on the earnings call, the company said that its Copilot service now has 20m paid enterprise seats. This suggests its AI services are gaining traction.

It’s worth pointing out that Microsoft is the second largest cloud computing company in the world (it’s not just a software play). And it’s developing its own AI chips. So while there are risks around software disruption, I continue to see a lot of potential here, especially while the price-to-earnings (P/E) ratio is in the low 20s.

Consistent top-line growth

Another name that’s been lumped into the software basket is AXON Enterprise (NASDAQ: AXON). The maker of Taser guns, it’s a global leader in public safety.

This company – which is using AI heavily today – continues to grow at a rapid rate. For the first quarter of 2026, revenue was up 34% to $807m (its ninth consecutive quarter of 30%+ growth). On the back of this performance, the company raised its full-year guidance.

However, investors weren’t that excited because it’s not an AI infrastructure play.

With the stock down around 50% from its highs, I see an opportunity to consider here (I’ve been buying shares recently). A growth slowdown is a risk given the company’s high P/E ratio (40, using next year’s earnings forecast), however, taking a five-year view, I’m very bullish.

No AI slop here

Finally, Palantir‘s (NASDAQ: PLTR) another AI stock that could be worth checking out. I’ve been buying here too.

Last quarter, this company generated revenue growth of an unbelievable 85% as businesses in the US scrambled to adopt its AI solutions. However, investors didn’t care – because it’s a software company.

Is Anthropic a risk? Potentially. However, if you listen to the Q1 earnings call, the company repeatedly talks about how its Artificial Intelligence Platform (AIP) is superior to standard LLMs.

“AIP is the only platform that establishes a true AI no-slop zone, a necessary requisite to converting potential AI leverage into compounding real-world value without risking enterprise disaster.”

Palantir Chief Revenue Officer Ryan Taylor

Now, this stock’s expensive – the forward-looking P/E ratio using next year’s earnings forecast is 68. However, if the company keeps growing at a prolific rate, it’s only a matter of time until it looks cheap.

So I think it’s worth considering as a growth play.

The post While everyone’s piling into AI infrastructure stocks like Micron and SanDisk, consider these out-of-favour Nasdaq 100 names appeared first on The Twelfth Magpie.

However, the selling has become indiscriminate, with wheat getting tossed out with the chaff. The big opportunity for long-term investors then is to identify which companies will actually benefit from AI rather than be destroyed by it.

Here’s one S&P 500 stock that I think is now oversold on AI fears and worth considering.

Technology ecosystem

The share I want to highlight is law enforcement tech firm Axon Enterprise (NASDAQ:AXON). I stopped writing about this stock for a few months because last August it soared above $850 and looked extremely overpriced.

I actually took the opportunity to sell a few shares around then to manage risk. However, the stock has since crashed 59% to $350!

At this price, I’m much more bullish from a long-term perspective. Because while software now accounts for 43% of Axon’s total revenue, it’s part of an ecosystem that involves hardware (specifically Tasers and body cameras).

Nowadays, Axon rarely sells a taser or body camera as a one-time purchase. Roughly 90% of new bookings are multi-year subscription bundles where agencies also use Axon Evidence (its cloud storage platform that offers various software services).

More than 2.5bn evidence files have been loaded into Axon Evidence. And it’s growing continuously, with 60m+ hours of body-worn camera footage gathered from its latest two generations of body cameras. This gives it an enormous data advantage to create AI products.

For an agency to quit Axon’s software, it would have to abandon the hardware, retrain officers on new devices and software, and migrate huge amounts of sensitive legal evidence elsewhere.

A defensible ecosystem supercharged by AI

Will that happen? Personally, I don’t think so. In fact, I only see AI making Axon stronger. It’s already taken in nearly $1bn in bookings from new AI products.

CEO Rick Smith sees the company becoming “the provider of the world’s largest global sensor network, fully connected and supercharged by AI. We will power the most intelligent, connected safety devices globally“.

If this vision is realised (and management has a great track record of execution), Axon’s market-cap should be much higher than $31bn in 10 years’ time. Its future contracted bookings swelled to $14.4bn last year.

Meanwhile, the company’s total addressable market continues to expand. Management sees growth opportunities with government, prisons, retailers (think shoplifting epidemic), utility companies, healthcare providers, and more.

[Axon] is an interconnected ecosystem of hardware, software, and cloud services embedded in a heavily regulated industry through long-term government contracts. That’s not just a business model, it’s an ecosystem that grows even more valuable the deeper our customers go into it. Rather than being a target for disruption, we are the disruptor. 

CEO Rick Smith.

That said, the stock’s still not conventionally cheap, even after the massive pullback. So any unexpected slowdown in revenue could cause a further sell-off. Regulatory risk around AI use in police reports could also increase.   

Stepping back though, what we see here is that Axon’s underlying business is getting stronger while its share price is crashing. That’s the sort of disconnect that should interest long-term investors.

The post 1 top growth stock to consider buying after it crashed 59% appeared first on The Twelfth Magpie.

In 2026 however, the growth investor’s been picking through the software wreckage. The sector’s been hammered by fears that artificial intelligence (AI) will eat software. In the six months to February, the software and services sector delivered the worst underperformance versus the S&P 500 in 30 years!

However, Baillie Gifford US Growth Trust is convinced that “some babies have been thrown out with the bathwater“. So which beaten-down S&P 500 stock has it bought?

Enter Axon

In February, the trust took the opportunity to add Axon Enterprise (NASDAQ:AXON) to its portfolio. Since August, this stock’s crashed 52%.

Now, Axon isn’t exactly a household name. And with a $33bn market-cap, it’s not very large for the S&P 500 index.

For the record though, I’m very familiar with the company, having first bought shares a decade ago. And after rising roughly 2,100% in 10 years (even after the recent pullback), this position has long been among my largest holdings.

While its name might not be familiar to most, Axon’s products will be. It owns the Taser brand behind the bright yellow stun-guns that are synonymous with modern law enforcement. They’ve saved countless lives in the US by increasingly replacing bullets.

Meanwhile, Axon’s army of vehicle and body-worn cameras capture incredible amounts of video evidence, which is immediately sent to, stored. and analysed in its cloud platform. As such, Axon operates one of the world’s largest video/data repositories.

[Axon] combines devices, software and data into an integrated system that becomes hard to displace once adopted.

Baillie Gifford.

Data advantage

Rather than being threatened by AI, Axon’s using the technology to create cutting-edge software products. For example, Draft One uses body camera footage to automatically write initial police reports, saving individual officers huge amounts of time.

There’s growing public pressure to shift resources toward neighbourhood policing (tackle shoplifting, for example). Axon’s efficiency-boosting Draft One should play a role here, as its Workforce Mini body-cams are specifically for retail staff and security guards. They increase accountability, capture evidence, and potentially deter assaults.

Meanwhile, Axon’s Fusus platform allows local businesses to share their existing CCTV feeds. This allows police to see inside stores during an active crime.

In 2025, revenue rose 33% to $2.8bn, while bookings surged 46% to $7.4bn. Total future contracted bookings hit $14.4bn, providing significant revenue visibility for many years to come (contracts are often 10 years now).

After only one year, its suite of AI products attracted $750m in bookings in 2025. Crucially, this revenue’s defensible because upstart AI rivals can’t access Axon’s real-world data originating from vehicles, body-cams, drones, and more.

As AI increasingly commoditises software development, the companies with defensible positions are those that own the full stack, including hardware, and we do.

Axon CEO Rick Smith.

Now, the biggest risk here is a high valuation (55 times forward earnings). If growth slows faster than anticipated, the stock may crumble. Legislation in some US states could also slow AI adoption among police.

However, like Baillie Gifford, I think the 52% dip-buying opportunity is worth assessing closely.

The post After making a fortune on Tesla, this FTSE 250 trust has piled into a little-known S&P 500 stock appeared first on The Twelfth Magpie.

Are opportunities emerging for long-term investors? Absolutely. Here are two growth stocks down 40% or more that have a ton of potential.

The number one company in public safety

First up, we have Axon Enterprise (NASDAQ: AXON). The maker of Taser technology, it’s a global leader in public safety solutions.

This stock’s been a phenomenal long-term investment. Over the last 10 years, it’s risen more than 2,000%. Recently though, it’s come crashing down. Currently, it’s about 45% off its highs.

So I think it’s time to give it a closer look. I certainly am.

Axon’s recent Q4 2025 results showed why this company’s been such a good investment. For the year, revenue was up 33% year on year to $2.8bn, marking the fourth consecutive year of annual growth above 30%.

For 2026, the company expects revenue to grow 27%-30%, which would take its top line to around $3.6bn. Looking further out, it’s targeting revenue of $6bn by 2028.

What’s driving this growth? Well, right now, the company’s benefitting from a ‘perfect storm’ of factors – increasing levels of unrest globally, lower levels of police staffing, and more demand for policing transparency.

Looking ahead, the company has a huge opportunity in terms of global expansion. Today, the majority of its revenue comes from the US.

Now, the downside to this stock is that it’s still expensive, even after the 45% share price drop. The forward-looking price-to-earnings (P/E) is currently about 59 – this doesn’t leave any room for a slowdown in growth.

Taking a five-year view though (our preferred time horizon here at The Motley Fool), I’m pretty confident that the company will grow into its valuation and reward investors. So I think it’s worthy of further research today.

A play on the Great Wealth Transfer

The other stock I want to highlight is Robinhood Markets (NASDAQ: HOOD). It operates one of the most popular – and fastest-growing – investment and trading platforms in the world.

Back in October, its share price was above $150. Today however, it’s around $70. At that price, the forward-looking P/E using next year’s earnings forecast is only 24. I see value at that earnings multiple.

Like Axon, this company’s growing at breakneck speed. Last quarter, revenue was up 27% year on year to $1.3bn. One factor behind this growth is the company’s incredible level of innovation. Today, it offers commission-free stock trading, options trading, crypto, prediction markets, tokenised stocks, private markets, banking, social trading, and more.

In the long run, I see a ton of growth potential. Because Robinhood’s platform is immensely popular with younger investors, over the next few decades these investors are likely to inherit trillions from older generations.

Of course, a major meltdown in the financial markets could derail the growth story here. This could see people lose interest in investing.

Taking a five-year view though, I like the risk/reward set-up. I believe the stock’s worth a look.

The post These legendary growth stocks are down 40% or more. Time to consider buying? appeared first on The Twelfth Magpie.

However, when I look at the growth companies in my Stocks and Shares ISA, I’m very optimistic that they’re only going to become stronger from AI. Here are two shares that stand out.

King chipmaker

Let’s start with the stock most synonymous with the AI revolution: Nvidia (NASDAQ:NVDA). Since the launch of ChatGPT, the company has been catapulted higher to become the world’s largest by market cap.

Last year, the AI chip king reported revenue growth of 65% ($219bn), with net income of $120bn. For this year, Wall Street expects the top line to grow a further 68%.

This is staggering growth for a company already operating at such scale. That said, rising competition from AMD, Broadcom, and Amazon poses risks moving forward.

Can AI keep booming? Well, there will likely be more AI agents than human workers by 2035. And the number of AI robots — including cleaning robots and self-driving vehicles — is tipped to hit 4bn by 2050, according to Citigroup.

As CEO Jensen Huang just confirmed: “Computing demand is growing exponentially — the agentic AI inflection point has arrived.”

In other words, we’re more at the beginning of this revolution than the end. Nvidia’s products look set to stay at the very centre of it all.

The incredible sums the firm spends on R&D to stay on top is an underappreciated competitive advantage.

A wide-moat stock

Next we have Axon Enterprise (NASDAQ:AXON). The stock is down 39% since August, even after jumping 20% earlier this week.

Axon sells Tasers, body cameras, and software products to law enforcement agencies. In 2025, revenue leapt 33% to $2.8bn, marking the fourth consecutive year of growth above 30%. Annual bookings, which is the total value of all contracts signed during the year, surged 46% to $7.4bn.

The company is bundling cutting-edge AI products into a subscription package, and this is going down a treat with customers. In fact, the first AI product called Draft One, which automates large parts of the police report writing process through audio footage captured by body cameras, is the firm’s fastest-ever growing product.

Draft One is saving officers many hours per week, allowing them to focus on active policing instead of writing reports.

Another product is a voice-activated AI companion directly in Axon body cameras. This includes real-time translation across 50+ languages, allowing the police to easily interact with almost any member of the public.

Building AI products with real-world data from its own body cameras gives the company a powerful competitive edge.

My pick now

Which one is the most attractive right now? I would say Axon looks toppy, and could pull back sharply if growth decelerates in the coming quarters. This is the key risk.

In contrast, Nvidia stock’s trading at 29 times forward earnings. That’s cheaper than shares like Rolls-Royce, Walmart, and Nike. None of which is growing as quickly or as profitably.

Of these two then, I would say Nvidia is worth considering buying in March. It’s currently priced more like a value than a growth stock.

The post Prediction: these 2 growth stocks in my ISA will be AI winners appeared first on The Twelfth Magpie.

Today, the firm still has substantial positions in both of these names. However, what’s interesting is that recently, the firm has been offloading some of its shares in these companies and aggressively investing in another growth company.

The next big thing?

Earlier this week, I took a look at Baillie Gifford’s 13F filing. This is a US regulatory filing in which large investment managers that own US stocks list their holdings and the stocks they’ve been buying and selling in the previous quarter.

Now, during the fourth quarter of 2025, Baillie Gifford bought and sold a lot of stocks. However, one move jumped out at me and that was some heavy buying of AXON Enterprise (NASDAQ: AXON).

A leading public safety company, it’s the maker of Taser equipment. It also offers body-worn cameras, in-car cameras, and cloud-based digital evidence management software.

AXON stock has had a great run in recent years. However, recently, its share price has come down significantly as growth and momentum stocks have fallen out of favour.

Baillie Gifford clearly sensed a buying opportunity – during Q4 it snapped up 74,579 shares in the company. This increased its holding by 284% to 100,828 shares (worth around £43m today).

That’s a significant increase in position size. That said, at the end of the quarter, the stock still only represented 0.43% of its overall US stock portfolio.

An investment opportunity?

Is AXON stock worth considering for a Stocks and Shares ISA or SIPP today? I think so.

It’s not a stock I’d go ‘all in’ on. It’s a high-risk name that has a lofty valuation with a forward-looking price-to-earnings (P/E) ratio of 56 and has historically been volatile.

However, the company is growing at a phenomenal rate right now. Over the last five years, its revenue has jumped about 300%.

And looking ahead, I expect its solutions to remain in high demand. Combine increasing levels of unrest globally (which could be exacerbated by AI-related job losses), lower levels of police staffing, and more demand for policing transparency, and the backdrop looks pretty favourable, in my view.

Note that revenue for 2026 is projected to grow 26% on 2025 levels. That’s a high level of growth.

Of course, this top-line growth isn’t guaranteed. And if it’s lower than anticipated, the share price could head down given the elevated valuation.

Taking a five-year view, however (our preferred investment horizon here at The Motley Fool), I think this growth stock will do well. I’m very tempted to buy it myself – I may pull the trigger in the next few weeks.

The post After making a fortune on Tesla and Amazon, Scottish Mortgage manager Baillie Gifford is piling into a little known growth stock appeared first on The Twelfth Magpie.

Microsoft shares have dropped by over 10% since 2026 kicked off. Palantir has seen a similar stumble. And Axon Enterprise (NASDAQ:AXON) has also been caught in the crossfire.

So, here’s what legendary investor Warren Buffett recommends for times of volatility.

What’s driving volatility?

In most cases, the recent pullback in stock prices came after Microsoft announced its latest earnings. The tech giant ended up missing some key analyst targets, particularly when it comes to its AI tools.

Rising AI scepticism seems to be moving across the wider tech industry. And this negativity also appears to be spreading to other sectors as well, particularly among growth stocks that are trading at lofty valuations.

Axon Enterprise is perhaps a prime example of this. Even after taking a double-digit tumble, the growth stock continues to trade at a lofty forward price-to-earnings ratio of 58. And with the shares seemingly priced to perfection, even a small dip in investor sentiment could have an outsized negative impact on its price.

What would Buffett do?

As a famous value investor, Buffett has rarely paid such premium valuations even for high-quality companies. Nevertheless, his timeless advice for dealing with stock market volatility remains just as applicable: “If a business does well, the stock eventually follows.”

Rather than panicking about what the share price is doing, Buffett has always remained laser-focused on what the underlying business is up to. Why? Because if the company is actually secretly thriving while the price is in freefall, that’s when tremendous buying opportunities emerge.

Let’s look again at Axon.

The public safety technology group has spent decades building a hardware & software ecosystem for law enforcement, covering body & dash cameras, non-lethal taser weapons, evidence management solutions, and criminal investigation tools.

So much so that over 18,000 agencies worldwide rely on its technology. And this dominant status has proven to be a powerful competitive advantage.

What could go wrong?

The combination of mission-critical products with dominant industry status is why Axon shares have long traded at a premium valuation. That hasn’t changed in 2026, and it suggests the recent volatility could present a buying opportunity.

However, it’s important to recognise there’s still substantial risk. Axon has done an excellent job of securing market share in the US. But with this market potentially getting saturated, the firm is increasingly relying on international markets to fuel growth.

So far, the group’s international expansion seems to be progressing well. But it comes with a lot of added complexities. Different regulatory jurisdictions introduce region-specific challenges for the software side of the business, creating headwinds that local rivals already have experience in navigating.

So where does that leave investors? As a shareholder, my long-term bullish stance on Axon remains intact. But I’m not blind to the fact that any short-term hiccups or wider stock market pessimism could trigger another round of downward volatility. That’s why I’m waiting for a better price to emerge before buying more. Luckily, there are plenty of other US growth stocks to explore right now.

The post As the US stock market drops, revisit Warren Buffett’s advice appeared first on The Twelfth Magpie.

As history has so perfectly demonstrated countless times before, when the market crashes, most investors are quick to rush for the exits and panic-sell their shares. Yet, this is a classic and potentially costly mistake. Here’s why.

Don’t try to time the market

Today, there are quite a few warning signs that US stock prices might be a bit overstretched.

The S&P 500’s price-to-earnings ratio is now near double its historical average, the level of unemployment’s on the rise, and even legendary investors like Warren Buffett were growing increasingly cautious – a strategy that his successor Gregg Abel’s continued.

But this was all true a year ago as well. And despite experts calling for a stock market crash in 2025 (and even 2024), it never materialised. That’s because, while they can seem obvious in hindsight, large market downturns are notoriously difficult to predict.

The data overwhelmingly shows that if investors just hold on through the volatility, their long-term portfolio performance often ends up being vastly superior.

Fun fact: according to JP Morgan, S&P 500 investors who held on through all the volatility between 2004 and 2024 (which included multiple market corrections and two major crashes) earned an average annualised return of 10.5%.

But investors who tried to time the market and subsequently missed out on just the 10 best days saw their average return slashed to just 6.2%. And those who missed out on the best 20 days only generated a 3.6% annualised return, barely keeping up with inflation.

What happens if disaster strikes?

Let’s assume the worst and say the S&P 500 does indeed crash this year. One of the best moves investors can make is instead of selling, think about buying. After all, when everyone’s in a panic, some terrific but expensive stocks can end up plummeting to dirt cheap discount territory.

Looking at my own portfolio, I’ve got my eye on several stocks I’m eager to buy more of at a better price. And that includes Axon Enterprise (NASDAQ:AXON).

As a quick introduction, Axon’s a leading provider of interconnected public safety technology. The company was originally focused on designing and manufacturing non-lethal Taser weapons for law enforcement. But today, it’s evolved into a comprehensive software and hardware enterprise that connects an entire ecosystem of body-worn cameras, dash cameras, drones, evidence management, investigation assistance, and dispatching solutions.

This ecosystem-first approach has created powerful network effects that lock in customers. With more data being processed by its platforms, Axon’s AI capabilities for fraud detection, facial recognition, and situational awareness are only amplifying its capabilities.

The only trouble is, this exceptional quality hasn’t gone unnoticed by other investors. At a forward price-to-earnings ratio of 81, the stock’s priced for perfection, inviting extreme volatility should anything go wrong. And with niche rivals like Cellebrite looking to chip away at its market share, Axon could be vulnerable to a price correction.

But if that happens, and the underlying business continues to impress, I’ll be standing by, ready to go shopping.

The post 1 move to avoid at all costs if the S&P 500 crashes in 2026 appeared first on The Twelfth Magpie.

Here, I’m going to highlight three S&P 500 stocks that I reckon will soar over the next five years, and make passive index fund strategies look silly. Are these names worth a closer look today?

A cybersecurity powerhouse

Over the next five years, the cybersecurity industry is likely to experience prolific growth as companies embrace artificial intelligence (this will increase the attack surface). This industry expansion should fuel strong growth at CrowdStrike (NASDAQ: CRWD).

It’s one of the largest players in the cybersecurity sector with a market-cap of around $120bn. It aims to secure the most critical areas of risk for businesses – endpoints, cloud workloads, identity, and data – to keep customers ahead of cyber criminals.

Now, like a lot of high-growth stocks, CrowdStrike carries a fair bit of risk from an investment perspective. Not only does it operate in a very dynamic environment (the cybercrime landscape’s always shifting) but it has a high valuation because its earnings are still small.

Taking a five-year view however, I see a ton of potential. I think it’s worth a look right now.

A chip monster

Another industry I believe will see massive growth in the years ahead is semiconductor (chip) manufacturing. And one company that looks well placed to benefit here – and could be worth considering as a long-term investment – is KLA Corp (NASDAQ: KLAC).

It specialises in process control and yield management solutions for the industry. So it’s essentially a ‘picks-and-shovels’ play on the theme – it should do well no matter which companies have the best chips.

One thing I like about this company from an investment perspective is that it’s very profitable. Return on capital employed (ROCE) is very high, meaning that the company should have plenty of capital to reinvest for future growth (and get bigger).

I’ll point out however, that the chip industry is cyclical (up and down). So while I’m bullish on the long-term outlook here, there could be periods where this stock experiences some short-term underperformance.

A stock for public safety

Finally, I’m bullish on Axon Enterprise (NASDAQ: AXON). It’s known for its Tasers (stun guns) but it also manufactures other policing and security solutions such as body cameras and drones.

This company has been growing at an incredible rate in recent years. Over the last five years, for example, revenue has climbed from $531m to $2,083m.

Looking ahead, I expect it to continue growing at a fast pace. Ultimately, it looks set to benefit from a ‘perfect storm’ of socio-political factors (more unrest globally, lower levels of police staffing, the demand for policing transparency, etc).

Of course, there are risks here. Slowing growth’s one – right now the stock’s priced for strong growth.

When I look to the long term here though, I can see this stock doing very well given the complex socio-political backdrop. I think it’s worth considering while it’s 30% below its highs.

The post 3 S&P 500 growth stocks that could make index funds looks silly over the next 5 years appeared first on The Twelfth Magpie.

It’s not yet clear what the wider implications of AI will be for jobs and wages. But those who have unique skills and abilities are likely to be in a stronger position than those who don’t.

Inflation

Buffett’s made the point that some people and businesses fare better than others in inflationary environments. That’s because some can raise their prices and others can’t.

The ones that can are the ones with something unique. Whether it’s individuals or companies, the best in the business can increase their prices as costs around them rise. As a result, they avoid being left behind by inflation. Because they’re the best at what they do, people are still willing to buy their products and services at higher prices.

That’s why Buffett said the best protection against inflation comes from investing in yourself, followed by investing in a strong business. And something similar is true of AI.

AI winners and losers

It seems clear that the AI revolution will provide some big productivity gains. What’s less apparent – at least so far – is exactly who or what the major beneficiaries will be. 

One potential scenario involves big reductions in employment, especially among white-collar workers. That isn’t guaranteed to happen, but it’s something to take seriously. 

I think the best way to prepare is along the lines of Buffett’s inflation strategy. It involves finding ways to add unique value and investing in businesses that can do the same.

The software industry looks like a major casualty of AI with coding expertise being easily replicated. But while there’s some truth to this, I think this view is much too simplistic.

Defensibility

One firm I think is interesting is Axon Enterprise (NASDAQ:AXON). The stock isn’t one I’m looking to buy at the moment, but it’s one I intend to keep a close eye on.

Axon’s software integrates with its hardware, which includes police tasers, cameras, and recording equipment. And regulation in this industry makes these products hard to displace.

That gives the company a competitive position that isn’t just based on having software that’s hard to copy. Its software is protected by its hardware, which is tough to compete with.

The firm pays out $550m a year in stock-based compensation and makes $150m in free cash. Given this, I’m not convinced a price-to-sales ratio of 18 represents an opportunity right now.

Investing in 2026

Investors looking at tech stocks in 2026 have to think about what sets a business apart from AI competition. It’s not enough to just have a large customer base to sell new products to.

I think one of the best forms of protection is being vertically integrated in a regulated sector. And Axon’s mix of hardware and software in the law enforcement industry’s a great example.

The stock isn’t on my ‘to-buy’ list right now, but not because of its business model. The question for investors then, is where else they can find similar companies with more attractive valuations?

The post Warren Buffett’s advice about the best investment you can make looks more relevant than ever in 2026 appeared first on The Twelfth Magpie.