The share price of Brainchip (BRN.ASX) are up a massive 819% this year, so we take a look and see are Brainchip (BRN.ASX) shares really unlocking the future of AI?
BrainChip is a global technology company that is producing a groundbreaking neuromorphic processor that brings artificial intelligence to the edge in a way that is beyond the capabilities of other products. The chip is a high performance, small, ultra-low power and enables a wide array of edge capabilities that include on-chip training, learning and inference.
Latest Quarterly Update (Appendix 4C, 31st March 2021)
In the latest quarterly update Brainchip seems quite proud of their acheivements listing the following as major milestone achievements:
- Cash Balance at the end of the quarter of US$20 million
- BrainChip begins Volume Production of Akida™ AI Processor
- BrainChip added to the S&P/ASX 300 index and the All Ordinaries
- Company Appoints Peter van der Made as Interim Chief Executive Officer
The cash balance is up from US19.1 million in the previous quarter mainly due to a result of exercising of options and small cash inflows of USD$1.2 million.
During the quarter, the Company had net cash outflows from operating activities of US$3.8M compared to US$2.7M in the prior quarter. The increase in outflows was due to a milestone payment of US$2.25M to a major supplier in advance of wafer fabrication for the production version of the Akida device.
The takeaway event during the quarter was that Brainchip mentions that the companies engineering partner has released the engineering design for their next-generation chip, the AKD1000 chip, which is expected to be ready for testing by Q3 2021.
Brainchip however only had cash inflows of USD $1.123 million during the quarter with a cash burn of -(3.819)million. It appears Brainship is burning through large amounts of dollars. However, this is typically expected of the industry in which it operates. This would only turn positive upon successful uptake of their Akida Chip.
Brain chip Shares, the ultimate AI share to add to the portfolio?
If your looking at getting exposure to the AI industry in your portfolio there are not many shares that can directly get you this exposure. Potentially one of the best at the moment is Appen (APX.ASX) however if Appen isn’t your fancy the next best may indeed be BrainChip.
Appen is trying to bring advanced AI computing to the edge of the chip, meaning there would be in theory less processing time required for the chip to make a decision as compared to traditional AI technologies where these decisions are typically made on the cloud. So if Brainchip succeeds we can hopefully look forward to smarter sensors and quicker AI decisions. This would be a massive game-changer for say driverless vehicles, medical equipment, etc.
We see AI as a major thematic for massive growth for years to come and see Brainchip holdings being able to capture massive upside over the next few years, especially if their chips can gain traction or even a buyout offer may be on the cards.
We see the AI sector as a whole growing at a massive pace for the foreseeable future and we hold AI sector shares in our portfolio.
Are Brainchip (BRN.ASX) Shares really unlocking the future of AI?
Overall Prophet is bullish on the AI sector as a whole and whilst currently, we believe Brainchip shares are overvalued we may easily be proved wrong as there exists massive bullish momentum towards the AI sector as a whole. If we were looking to gain more exposure to the AI sector we would potentially consider adding BRN to our portfolio. However, at current prices, we see Appen as a better value/growth play and have a large portion of our portfolio dedicated to Appen.
Please Remember all Articles Published on Prophet Invest are Opinion only
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