Shares in BrainChip Holdings Ltd (ASX: BRN) have nearly doubled in value over the last couple of weeks.
This is feeling a lot like déjà vu…
BrainChip’s shares followed a similar trajectory in September last year and hit highs of 97 cents at one point. After languishing at around 35 cents per share for months, there appears to be some serious momentum building.
BRN share price
What does BrainChip do?
BrainChip is focused on developing a neural networking processor, which it says will help bring artificial intelligence (AI) and other high powered computing to more customers.
The company’s Akida neural processer is designed to help customers create low-powered chips and systems, making powerful computing available outside a cloud environment.
Recent activity
There doesn’t seem to be any obvious announcements or contract wins that could be a potential catalyst here.
Last week, BrainChip revealed that CEO and Managing Director Louis DiNardo’s role had been terminated and is leaving the company to pursue other interests. A subsequent article published in the Australian Financial Review later confirmed that Louis was recovering from third-degree burns from a prior incident. According to DiNardo, the company is likely to benefit from a more energetic and committed leader.
The only other announcement that could partly explain the recent movement of the share price would be the inclusion of BrainChip in the ASX300 index which was effective as of 22 March.
This means managed funds and ETFs are able to purchase Brainchip’s shares if they’re tracking the ASX300 index. I probably wouldn’t be buying on this news alone as it seems unlikely it’ll provide any sustainable tailwind.
Are BrainChip’s shares a buy?
Most short-term traders often use price charts and volume to analyse shares. However, as a long-term investor, I focus on the underlying fundamentals of the business.
If you’re a long-term believer in the company and its technology, perhaps you won’t be too bothered if the share price was to fall 30% tomorrow. However, rather than buying at all-time highs, I think it would make more sense to see if the company can win some more contracts, which would pave the way towards profitability.
For more share ideas, click here to read: 3 ASX growth shares to watch this week.
