A defense contractor? In my portfolio? It’s more likely than you think. Despite activist angst and divestment discourse, the Nasdaq 100 announced Monday that it would add two defense firms to the tech-flavored index in its annual shake-up.

The first, AI firm PalantirPLTR

, is already a crowd favorite among investors — taking just a few short years to leap into America’s most-tracked index. But a lesser-known name also made the selection committee cut — it’s up more than 113,000% since its June 2001 IPO.

Not all that shocking: Unless you work in law enforcement or the military, Axon EnterpriseAXON

might not be a familiar name, but you probably know its most famous product — the TASER. Founded in 1993 as TASER International, Axon has transformed into a Swiss-army knife of defense solutions — expanding its range of non-lethal shock weapons and diversifying into other “public safety” products such as drones, body cameras, and VR training equipment. But its 153% YTD rally comes courtesy of the company’s newest and boldest business — its tech and AI vertical.

• In its latest quarterly report, Axon’s revenue hit $544M — up 32% year-over-year. The majority of those earnings— $222M — came from TASER weapon sales.
• However, its Cloud & Services division, which generated $203M in the quarter, is expected to surpass its namesake business in the coming quarters.

Defense Tech

Analysts expect Axon’s Cloud & Services business to exceed $1B in annual recurring revenue (ARR) in 2025, capitalizing on growing demand for more modern tools in law enforcement and defense. The public safety tech provider’s’s products also boast features that investors are obsessing over — AI.

• Axon’s tech helps law enforcement set up “real-time crime centers” to track and respond to crime, manage digital evidence, and enhance it.
• Recently, the company launched Draft One, which utilizes “connected body cameras, cloud evidence management, video transcription, and generative AI” to create first drafts of police reports.

The power of AI: According to Axon, its new AI platform is already having an impact. In a series of studies with regional police departments, the organization claims the technology has reduced the time to write incident reports by 67%. It also says it has sped up the redaction of evidence — and improved response times for vehicle theft, unauthorized drones, and other incidents. After its unbelievable last year, it will be interesting to see if this technology continues to deliver for investors.