A few instances in recent times, I’ve needed to trim again my holding in Axon Enterprise (NASDAQ: AXON) to cease it completely dominating my Shares and Shares ISA.

A fast look on the share price chart exhibits why. It’s now risen by 757% in 5 years, at a median annual compound price of about 54%!

Doubtless, this has been a pleasant downside to have. I’ve been capable of deploy some harvested features into different shares which have additionally carried out effectively, together with Rolls-Royce and Taiwan Semiconductor Manufacturing (TSMC).

Admittedly, there have been some dangerous picks, similar to additions to Moderna and Diageo. Nevertheless, a single large winner over time will usually greater than compensate for a lot of losers.

The weeds wither away in significance because the flowers bloom. Over time, it takes just some winners to work wonders.

Warren Buffett

Dilemma

My new ‘problem’ is that the Axon share price has principally gone up vertically in current months.

As soon as once more, it’s dominating my ISA, leaving me with a little bit of a dilemma. Specifically: do I promote extra shares or depart the place alone?

The expansion inventory is valued at an eye-watering valuation, but that was additionally the case once I final diminished my holding. Since then, it’s greater than doubled, that means I’ve missed out on much more returns.

After all, I wouldn’t be pondering like this if the inventory had fallen 50% lately. I’d be patting myself on the again, proud at my self-discipline and expertise in portfolio danger administration.

Regulation enforcement large

Axon is the corporate behind the well-known yellow Tasers, in addition to the bodycams that many law enforcement officials put on. Nevertheless, this {hardware} is generally bundled with software program (recurring income), offering entry to its cloud-based proof administration system (Axon Proof).

It has a near-monopolistic place in its business, achieved via relentless innovation. This was on show in Q3, because it highlighted progress alternatives in digital actuality coaching, robotics, and utilizing drones as 24/7 first responders to incidents.

Income jumped 32% 12 months on 12 months to $544m, with working money circulate rising 45% to $91m. Full-year steering was upped barely to $2.07bn (32% progress).

Nevertheless, it was the commentary on synthetic intelligence (AI) that was actually thrilling. Law enforcement officials spend up to 40% of their time writing stories (not what most signed up for).

Subsequently, I count on its new Draft One product to be a smash hit with prospects. That is an AI-powered instrument that automates police report writing, utilizing bodycam audio to generate draft stories in seconds, saving officers huge quantities of time.

Axon will let prospects subscribe to an increasing set of AI capabilities and options. Basically, what it’s providing right here is AI-as-a-service, and it may very well be one other enormous long-term income driver.

I’m letting it run

One danger is that Axon is concentrating on extra progress with federal businesses. Nevertheless, this can be a very aggressive panorama the place it faces established defence contractors and know-how companies vying for federal contracts.

Plus, I count on volatility within the share price if there’s a market sell-off.

Trying forward although, I believe legislation enforcement shall be well-funded beneath Donald Trump, benefitting Axon.

Weighing issues up, I’m going to go away the holding alone for now. I believe it’s set up for extra features over the long run.