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Brainchip (ASX:BRN) share price jumps on quarterly update

stylised image of exploding cloud coming out of neck of man's suit representing exploding Brainchip share price
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The Brainchip Holdings Ltd (ASX: BRN) share price surged to a one-month high this morning after it released its quarterly update.

Shares in the artificial intelligence company jumped 13.2% to 43 cents at the time of writing. In contrast, the All Ordinaries (Index:^AORD) (ASX:XAO) and the S&P/ASX 200 Index (Index:^AXJO) gained around 0.8% each.

Management announced that a number of well-known companies have signed up to its Early Access Program (EAP).

Brainchip shares jumps on key customer trials

These include the Ford Motor Company, Valeo, Vorago Technologies and the National Aeronautics and Space Administration (NASA).

The program allows organisations to evaluate and test Branchip’s Akida Neuromorphic System-on-Chip (NSoC) offering. Brainchip receives a fee to cover its costs from these organisations to participate in the EAP.

The fee is not the reason why Brainchip got a boost to its cash holdings recently.

Brainchip’s cash position improves

The company reported a cash balance of US$12.2 million ($17.2 million) at the end of the September quarter. This was increased by around US$5 million to around US$17.6 million this month.

The extra cash came from the proceeds from the Put Option Agreement with LDA Capital, as well as the exercise of employee and investor stock options.

Brainchip filed for the listing of eight million new shares this morning from the conversion of options that were well in the money. Of the total, 4.5 million of these options had a strike price of 15 cents, while 3.5 million had a strike of 20 cents.

How Brainchip’s technology works

The company is touting Akida as a complete AI chip for neural networks as it doesn’t require external memory or other components to function.

The key areas that Akida is targeting are AI Edge applications for Smart Transportation, Smart Home, Smart Health and Smart Industrial IoT.

“With a unique ability to process information such a sight, sound, smell, touch and taste in real-time with incremental learning the Akida technology addresses the burgeoning AI Edge market that is forecasted to reach US$50Bby 2025 according a Tractica report,” said Brainchip in its ASX statement.

“Akida provides solutions in a manner that cannot be accomplished with traditional Convolution Neural Networks.”

BRN share price outperforms WAAAX

The Brainchip share price has outperformed the WAAAX tech darlings since the start of 2020. The BRN share price is up over 780% when the Afterpay Ltd (ASX: APT) share price is up over 230%.

The WiseTech Global Ltd (ASX: WTC) share price, Altium Limited (ASX: ALU) share price and Xero Limited (ASX: XRO) share price are trailing with gains of 60% or less.

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Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of AFTERPAY T FPO, Appen Ltd, and WiseTech Global. 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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