The BrainChip (ASX:BRN) share price is down 65% in just three weeks

The BrainChip Holdings Ltd (ASX:BRN) share price has crashed lower over the last three weeks. Here's why it is down 65%…

The BrainChip Holdings Ltd (ASX: BRN) share price has continued its disappointing run and is sinking lower again on Wednesday.

At the time of writing the artificial intelligence technology company's shares are down 8% to 34 cents.

This means the BrainChip share price is now down a whopping 65% since peaking at a record high of 97 cents just three weeks ago.

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Image source: Getty Images

Why is the BrainChip share price crashing lower?

This decline appears to be a bit of a reality check for investors after a period of irrational exuberance took its market capitalisation well above $1 billion.

Investors were fighting to get hold of the company's shares after it announced a collaboration with VORAGO Technologies at the start of September.

This collaboration is intended to support a Phase I NASA program for a neuromorphic processor that meets spaceflight requirements.

Management believes its Akida neuromorphic processor is uniquely suited for spaceflight and aerospace applications due to the device being a complete neural processor and not requiring an external CPU, memory, or Deep Learning Accelerator.

While this collaboration sounds impressive on paper, it is a long way off from getting a thumbs up from the space agency.

As I have mentioned previously, the Phase I program is open to anyone. NASA has invited companies to provide "concept of operations of the research topic, simulations and preliminary results. Early development and delivery of prototype hardware/software is encouraged."

It is Phase 2 where things would get a little more interesting and a working prototype would be required.

NASA explained: "Phase II deliverables include a working prototype of the proposed product and/or software, along with documentation and tools necessary for NASA to use the product and/or modify and use the software. Hardware products should include both layout and simulation."

Even then, there's no guarantee that BrainChip's product would be selected if it moved onto the second phase. There are other companies with vastly larger budgets attempting to create similar products.

What now?

I would suggest investors stay clear of BrainChip and wait to see how its products develop in the future.

In the meantime, I would recommend investors get exposure to artificial intelligence through an established tech company like Appen Ltd (ASX: APX).  

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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