Smart city.
Follow the city budget.

Denver's city council voted last year against extending its contract for Flock Safety's license-plate cameras. The mayor extended it once anyway, and when it finally ran out in March, the proposed replacement was Axon.

The money didn't leave the police budget. It changed vendors.

That's how city technology spending works going into 2027. Cities are short on money and voters are wary of surveillance, but the spending still flows. It just goes to a narrower set of things than the "smart city" brochures promised. The original pitch was a city covered in sensors, with parking, traffic lights, and trash pickup all optimized by software. Most of that never got bought. What cities actually pay for, the stuff the industry calls govtech, is software to run courts, taxes, and permits; smart meters for water and power; enforcement cameras; and above all, public safety technology like body cameras, drones, and 911 systems. Robotaxis are the one futuristic piece that has actually scaled, and cities don't pay for them at all.

The budgets are getting tighter, too. Fewer than half of city finance officers in the National League of Cities' latest survey were optimistic about meeting their needs this year, and every dollar of the federal pandemic aid has to be spent by December 31. The stocks show it. Tyler Technologies, Axon, Badger Meter, and Xylem are all down about a quarter or more this year, in a market that's up.

Smart city stocks in 2027 follow the city budget, and the budget protects two things: public safety, which already eats around 60% of a typical city's general fund, and projects that pay for themselves. This list is grouped that way, plus a software backbone, one turnaround, and the robotaxi that skips the budget entirely.

Public safety is the biggest piece of most city budgets and the last place councils cut, so it's where smart city stocks are safest.

Axon NASDAQ: AXON

Axon started with Tasers and body cameras and has turned them into a subscription platform: evidence storage, report writing, real-time crime centers, 911 software and now drones. Revenue grew 35% last quarter, its tenth straight quarter above 30%, and it has $15.1 billion of contracted future bookings.

The fastest-growing piece is drones. Its Dedrone counter-drone business has passed $100 million in revenue, and at one police department its drone-as-first-responder program gets a camera over an emergency in 53 seconds on average. The stock is down about 27% this year and still trades at well over 100 times earnings. That's the price of owning the best business in government technology.

Motorola Solutions NYSE: MSI

Motorola Solutions makes the radios police and firefighters talk on and the 911 systems that dispatch them. When a city tightens its budget, those are the last things to go, because nothing works without them.

Sales grew 13% last quarter, its backlog hit a record $15.6 billion, and it raised guidance. It's also moving into drones, with a $1.5 billion deal to buy D-Fend Solutions, an Israeli counter-drone company. Motorola is up about 17% this year, one of the few city-tech names in the green.

Flock Safety (Private)

Flock Safety sells license-plate-reading cameras to more than 5,000 police agencies, and it's become the face of the backlash. Since the start of 2025, at least 30 localities have shut off its cameras or canceled contracts, many after it admitted to pilots with federal border and immigration agencies. In August, Florida's transportation department ordered all license-plate readers off state highway land within 30 days.

It's still one of the most valuable private companies in the space, reportedly valued at $8.4 billion. Flock shows the pattern: the controversy is real, it costs individual contracts, and the overall spending keeps growing.

Tyler Technologies NYSE: TYL

Tyler Technologies runs the software for thousands of local courts, tax offices, permit desks and 911 centers. Once a county moves its court records onto Tyler, it almost never leaves.

The stock fell 15% in a day in February when a revenue miss collided with fears that AI would gut software companies, and it's down about 29% this year. The business doesn't look like it's being gutted. Cloud subscription revenue grew 22% last quarter, its 22nd straight quarter of 20% or better, bookings hit a record, and Tyler has bought back about 6% of its shares this year. Software stocks broadly have recovered from the AI scare. Tyler hasn't yet.

When money is tight, utilities and city departments buy technology that saves more than it costs. That's the pitch behind these four smart city stocks.

Itron NASDAQ: ITRI

Itron makes smart meters for electricity, water and gas, and the networks and software behind them. A meter that catches leaks, theft and billing errors pays for itself, which keeps utilities buying even in lean years.

Hardware sales are lumpy, and revenue fell 7% last quarter as big rollouts shifted. But recurring software revenue grew 21%, gross margin hit a record, and the stock jumped 26% the day it reported. Itron is turning into a software company that happens to sell meters.

Xylem NYSE: XYL

Xylem sells pumps, treatment equipment and leak-detection sensors to water utilities. Most American water systems are old and leaking, and most can't afford to dig up and replace their pipes. Finding and fixing the leaks is the cheaper answer.

Orders jumped 42% last quarter, and in August Xylem agreed to buy two pump makers for about $1.5 billion. The stock is still down about a quarter this year, which makes it one of the cheaper ways to own a utility spending cycle that has to happen eventually.

Badger Meter NYSE: BMI

Badger Meter is the purest public bet on smart water meters, and 2026 showed what city budget stress looks like. Sales fell in both the first and second quarters as utilities pushed big meter rollouts later, and the stock dropped 24% in a single day in April.

Nothing is wrong with the product. The projects are delayed, not canceled. That makes Badger the cleanest signal on this list: when its orders turn back up, utility budgets have loosened.

Samsara NYSE: IOT

Samsara puts sensors and cameras in commercial vehicles and connects them to software that tracks location, fuel, maintenance and driver safety. The same system works on a city's garbage trucks and snowplows as on a delivery fleet.

It's the cheapest way for a city to get "smart": no new infrastructure, just a box in each vehicle that pays for itself in fuel and repairs. Annual recurring revenue passed $2.1 billion, growing 30%, and it's been profitable on a GAAP basis for four straight quarters.

Verra Mobility NASDAQ: VRRM

Verra Mobility has two businesses. One runs red-light, speed and bus-lane cameras for cities, including a new five-year New York City contract worth up to $998 million, and that business grew 20% last quarter. The other handles tolls for rental-car companies, and in May, Avis gave notice it would leave. The stock fell 70% in a day.

Avis has since agreed to a new deal on much worse terms, Verra has cut guidance twice, and a new CEO starts November 1. With about $1 billion of debt, this is a real turnaround and a risky one. It's here because inside it is one of the best city businesses on this list: enforcement cameras that pay for themselves in fines.

Alphabet NASDAQ: GOOGL

Alphabet owns Waymo, the one futuristic city technology that's actually scaling. Waymo now carries riders in 15 metro areas and gives more than 500,000 driverless rides a week. It raised $16 billion in February at a $126 billion valuation.

Cities don't buy Waymo. Riders do, which is exactly why it's growing while city-funded projects stall. Alphabet is a giant, and Waymo is a small part of it, but it's the only public way in.

The surveillance fight is moving from city halls to state capitals, and that will hand the market to the biggest vendors.

Until this year, the backlash played out one city council at a time. A vendor could lose Austin, Evanston or Denver and win somewhere else. Florida changed that in August, when its transportation department ordered license-plate readers off every state highway. Illinois got there earlier through an audit: its Secretary of State's review of how plate-reader data was being shared is what pushed Evanston to switch its cameras off.

State rules and audits are expensive to comply with, and they apply to every customer in the state at once. That favors the vendors with the lawyers, the security teams and the auditing systems to meet them, which means the largest smart city stocks, Axon and Motorola, not the startups. The backlash won't shrink public safety technology. It'll consolidate it.