AI trade next year: This stock is an AI ‘sleeper hit’

Investors looking to ride the next leg of the AI wave are increasingly casting their nets beyond the usual chip giants. As the rally broadens, attention is shifting toward sectors and companies where AI can unlock real-world productivity gains. One “sleeper hit” to watch: Axon. Best known for Tasers and body cameras, Axon is positioned to use AI to help stretched public safety agencies do more with less—an underappreciated angle on the AI trade as we head into the new year.

The rally is broadening beyond the Magnificent Seven

The defining theme going into next year is breadth. After a year dominated by mega-cap tech, investors are increasingly rotating into utilities and industrials—areas that stand to benefit as AI adoption widens and infrastructure upgrades accelerate. Even Nvidia, the star of the AI show, has seen bouts of profit-taking late in the year as investors debate valuation and look for fresher entry points elsewhere.

Alphabet has emerged as a notable beneficiary of this mindset shift. Momentum around its Gemini model helped propel the stock into year-end, at points even eclipsing Nvidia’s year-to-date performance. The takeaway: market participants are actively seeking new ways to participate in AI’s growth story without paying peak multiples for the most obvious names.

Infrastructure still matters: power and networking plays

While chipmakers remain crucial, the AI buildout depends on the “picks and shovels” that power and connect data centers. Watch for continued interest in:

• Eaton: addressing the energy and power distribution bottlenecks created by compute-hungry AI workloads.
• Marvell Technology: supplying silicon at the heart of accelerated networking and custom compute.
• Arista Networks: enabling high-speed, cloud-scale networks that feed AI training and inference.

These enablers are leveraged to the capacity upgrades AI demands, a theme that should persist as enterprises move from pilots to production deployments.

The sleeper hit: Axon’s AI-powered productivity boost

Axon is often shorthand for Tasers and body cameras—but the bigger picture is a software-led public safety platform that can harness AI to tackle a systemic challenge: police staffing shortages and rising administrative burden. Agencies need to do more with fewer people, and AI can be a force multiplier.

Where AI fits:

• Automating time-consuming workflows such as transcription, report drafting, and evidence tagging.
• Accelerating video management—from redaction to search—across massive volumes of footage.
• Enhancing situational awareness by surfacing relevant data faster, potentially improving response times and outcomes.

As public safety budgets prioritize efficiency and accountability, the appetite for tools that save time and improve documentation quality should grow. That positions Axon to benefit not just from hardware upgrades, but from recurring software and services tied to AI capabilities. It’s a practical, defensible use case—less about hype, more about measurable productivity—making Axon a compelling, under-the-radar AI story for the year ahead.

What to watch in the new year

• Adoption milestones: Evidence of AI tools moving from trials to standard workflows in public safety, utilities, and industrials.
• Infrastructure bottlenecks: Power availability and network capacity remain gating factors for large-scale AI rollouts.
• Valuation discipline: After a big year for AI leaders, investors are selectively rotating into quality names with clearer entry points.
• Earnings signals: Guidance around AI-related demand, software attach rates, and deferred revenue will be key tells.
• Platform durability: Companies that combine hardware moats with sticky software (and AI) subscriptions may see more resilient growth.

Bottom line: As the AI trade broadens, investors are seeking companies that deliver tangible productivity gains, not just headline-grabbing models. Infrastructure names like Eaton, Marvell, and Arista should continue to be central. But don’t overlook Axon—the public safety platform could be the AI “sleeper hit” that turns practical automation into sustained growth.

Disclosure: This article is for informational purposes only and does not constitute investment advice.