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Axon Surged After Earnings and Is Still Down Over 50% From Highs
Author: Leo Miller. Posted: 5/12/2026.
Key Points
- Axon Enterprise went from a market darling to getting crushed, partially due to AI fears hitting software stocks
- Despite investor pessimism, Axon has consistently impressed with its financial results, leading to large post-earnings spikes
- AI is becoming a growth driver and the latest element of the company's hardware-driven flywheel effect
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After getting beaten down for much of the past year, Axon Enterprise (NASDAQ: AXON) scored a big win after its latest earnings report. Shares surged nearly 11% following the company’s May release, as it posted impressive sales, earnings, and guidance.
Nonetheless, the defense stock is still down sharply, trading at less than 50% of its 52-week high reached in August 2025. Some of that decline was likely justified, but other aspects are much more questionable.
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π Unlock the ticker now and get it completely free.At its previous highs, Axon traded at a forward price-to-earnings ratio (P/E) near 130x, a clear sign of a company “priced for perfection.”
However, the stock has also fallen amid fears that artificial intelligence could disrupt the software industry. That concern persists even though hardware sales play a critical role in Axon’s business and make its flywheel effect work.
Ultimately, Axon’s results show why there is still plenty of reason for optimism about this name going forward.
Axon’s Beat and Raise Q1
In Q1 2026, Axon reported revenue of $807.3 million, representing growth of 34% year over year (YOY). That easily beat estimates of $778.9 million. Meanwhile, adjusted earnings per share (EPS) rose by just under 10% to $1.61, narrowly topping expectations of $1.60. Notably, gross margins took a meaningful hit, causing revenue growth to outpace adjusted EPS growth.
Gross margin fell by 150 basis points YOY to 59.1%, with the company citing global tariffs as the primary driver. This remains a legitimate factor weighing on Axon stock and a persistent talking point on earnings calls.
Even so, the company maintained its full-year adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin guidance of 25.5%. Axon also raised its full-year revenue growth guidance to a midpoint of 31%. That marks a meaningful increase from prior midpoint guidance of 29%, helped by contracted booking growth that accelerated 44% YOY, well above Q1 sales growth. Importantly, Axon continues to see strong growth from its AI offerings, countering the idea that the technology is a major threat rather than a tailwind.
AI Growth Soars as Law Enforcement Buys In
Axon’s AI Era plan is its most expensive hardware and software package for law enforcement. Bookings for this offering rose 140% YOY, with the company noting that “nearly all large domestic law enforcement agencies are now including AI in their purchases.” That is a powerful statement, showing that AI is becoming central to how agencies make purchasing decisions rather than just a nice-to-have feature.
Slide 23 of the company’s Investor Deck also shows how hardware sales underpin the company’s software, services, and AI flywheel effect. In the first year of the AI Era Plan, hardware sales account for about half of revenue. This includes products such as tasers, body cameras, virtual reality headsets, and drones.
After year one, however, hardware sales are minimal. Over a five-year period, the combination of AI and non-AI software and services makes up more than 75% of total plan revenue. This includes offerings like Draft One, where AI uses body camera recordings to create a first draft of incident reports, saving officers time on paperwork.
Agencies continue paying for these services over several years, but they are only useful after the initial hardware purchase. So while Axon does have significant software exposure, its hardware-first model provides protection from AI competition that software-only companies do not have.
Adding to that, demand for Axon’s drones is spiking. During the quarter, its counter-drone revenue increased 300% YOY. Bookings rose even more, up 500% YOY, indicating that demand is accelerating.
Axon Continues Its Post-Earnings Success; Markets Remain Unconvinced
Notably, despite recent declines, Axon has consistently demonstrated the strength of its business through its financial results. Following its past 10 earnings releases, Axon has seen an average post-earnings gain of approximately 12%. That is a feat investors would be hard-pressed to find in many other stocks.
Of course, past post-earnings success does not guarantee that pattern will continue. Still, it is evidence of one thing: the market has repeatedly underestimated Axon, only to adjust after the company delivers numbers it cannot ignore. It is arguable that the same thing is happening now, given the stock’s sharp decline and post-earnings jump.
Furthermore, much of Axon’s price action continues to move in line with the broader software market. That suggests investors have yet to fully separate Axon from software stocks, despite the significant differences in its business model.
Analysts remain constructive on Axon. The MarketBeat consensus price target sits near $713, implying upside of more than 75%. Targets updated after the company’s earnings report are lower, averaging around $604. Even so, that figure still implies substantial upside of just over 50%.
SoundHound’s Bottom Is In—Inflection and 50% Upside Ahead?
Author: Thomas Hughes. Posted: 5/8/2026.
Key Points
- SoundHound isn't out of the weeds by a long shot but is on track to gain momentum in 2026.
- Acquisitions and new products position it as a voice-activated agentic AI winner.
- Analysts are optimistic, and institutions are accumulating, setting the stage for a short-covering rally and potentially a squeeze.
- Special Report: The Biggest IPO Ever: Claim Your Stake Today
SoundHound’s (NASDAQ: SOUN) stock price appears to have bottomed earlier this year and may now be in the early stages of a reversal. While persistent concerns such as cash burn remain, the company appears to be gaining traction and has a major acquisition ahead.
The LivePerson Acquisition
LivePerson is a conversational cloud AI platform built around a messaging system that enables brands to communicate with consumers across multiple channels.
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If the acquisition closes as expected, the merged company will offer unified voice and digital messaging across the communications ecosystem. The combination should help accelerate and sustain growth, while pooled data improves AI training and enhances accuracy.
Path to Profitability
Ultimately, the combination is expected to accelerate sustainable growth while improving the path to profitability. As it stands, the outlook for profits remains mixed. Company executives are forecasting an inflection in profits by early 2027, while many analysts do not expect sustainable profitability until 2028. The takeaway for investors is that plenty of uncertainty remains, but the risk may be to the upside given the ultra-low stock price, the recent acquisition of Amelia, and the launch of the firm's OASYS product.
Amelia enables voice-activated, automated customer service and employee-facing interactions, including agentic AI capabilities. It expanded SoundHound’s services beyond simple customer interactions, delivering enterprise-grade agentic capabilities. OASYS is a self-learning, agentic AI platform that enables fast and easy development, deployment, and upgrading. Its key feature is self-learning, allowing the system to learn from new data, build AI, and improve agentic operations over time.
Mixed Quarterly Results Send SoundHound Lower
SoundHound had a decent Q1 despite a mixed bottom-line result and the market reaction. The company reported $44.2 million in net revenue, up nearly 52% year over year (YOY) and 375 basis points (bps) above expectations. Strength was broad-based across verticals and categories, with notable momentum in the core business. Automotive and Internet of Things (IoT) grew by nearly 90% when adjusted for acquisitions, underscoring the strength of the business model. New customers are also becoming long-term customers, increasing their usage of the platform.
Margins were a mixed bag, with adjusted gross margin strong at 49.7% and adjusted EBITDA still negative. However, non-recurring items tied to the growth strategy are to blame, and guidance is more encouraging. The company reaffirmed its revenue target, expecting $242.5 million at the midpoint, which is above analyst consensus and points to robust growth for the remainder of the year.
Cautious Analysts Forecast 50% Upside: Institutions Buy Into the Outlook
The analyst response following the release aligned with 2026 analyst activity, showing caution amid continued losses but optimism about the future. The 10 analysts tracked by MarketBeat carry a consensus Moderate Buy rating, with a 60% buy-side bias and more than 70% upside to the consensus target. If traction becomes more evident in the coming quarters, particularly regarding the LivePerson acquisition and the path to profitability, sentiment will likely improve and strengthen the stock’s catalyst.
Institutions are buying into the outlook despite near-term headwinds. MarketBeat data shows the group owns only 20% of the stock but has been accumulating at a robust, roughly $3-to-$1 pace over the trailing 12 months. Activity was strong in Q1 2026, the trend continued into early Q2, and it will likely remain positive as the year progresses.
The biggest risk is that SoundHound fails to execute its strategy, including the acquisition of LivePerson, in which case the downside in the stock price could be significant.
Short Sellers Create a Risk and Opportunity in SoundHound Stock
Short-sellers are leaning hard into the SoundHound trade. Activity has increased over the past two years, pushing short interest to approximately 40% of the float and creating a meaningful headwind for the stock. That limits upside in the near term, but a catalyst for short covering is taking shape.
Aside from the LivePerson acquisition, SoundHound is well-positioned to gain traction in the current and upcoming quarters. Add LivePerson to the mix, and short covering could quickly turn into a squeeze. In that scenario, SOUN could easily move back toward the analysts’ consensus target, near the midpoint of its long-term trading range.
The technical action is bullish, suggesting that short-covering may already be underway. The market is forming a Head & Shoulders pattern, setting up to confirm the second shoulder with the post-release price dip. The likely outcome is that support near $8 is confirmed and a rebound follows soon after.
The critical resistance level is the pattern's neckline, which points to a bullish bias. A move above $9.75/$10 may be the technical trigger that accelerates short covering.
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