Why did the BrainChip (ASX:BRN) share price have such a stellar year in 2021?

What has been the driving force behind the BrainChip share price?

| More on:
a man in a business suite throws his arms open wide above his head and raises his face with his mouth open in celebration in front of a background of an illuminated board tracking stock market movements.

Image source: Getty Images

Key Points

  • The BrainChip share price has been one of the best performers on the ASX
  • Positive developments has led to investors taking keen interest in the company
  • Valued currently at $3.65 billion

The BrainChip Holdings Ltd (ASX: BRN) share price surged over the course of 2021. Market confidence in the company’s technology and interest in the artificial intelligence (AI) sectors led its shares to rally higher.

Since the beginning of 2021, the AI technology company’s shares accelerated by almost 60%. In comparison, the S&P/ASX 200 Index (ASX: XJO) gained roughly 13% over the same period.

While BrainChip shares closed at 68 cents on 31 December, since then its shares have zoomed to incredible highs.

At Wednesday’s market close, the company’s shares finished up 14.52% to $2.13 apiece. It’s worth noting that early that day, its share price touched a record high of $2.34 before treading lower.

What’s driving BrainChip shares higher?

With the world ushering towards an era of technology innovation across AI platforms, the BrainChip share price has been racing ahead.

In the past few months, the company announced a number of positive developments regarding its Akida chip technology. This steered the company’s shares to strong gains in the latter part of 2021.

The party kicked off when the company struck a deal with Japanese semiconductor firm, MegaChips in November.

Under the deal, MegaChips will have access to BrainChip’s intellectual property for developing next-generation edge-based AI solutions. This will see the use in designing and manufacturing the Akida technology into external customer’s systems on chip designs.

More recently, BrainChip announced that Information Systems Laboratories is developing an AI-based radar research solution for the United States Air Force. The technology will employ BrainChip’s Akida neural networking processor as a tool to incorporate into their portfolio of research engineering and engineering solutions.

And just yesterday, the company announced that it had secured a United States patent regarding its neuromorphic artificial intelligence chips.

The key features on the patent protect the company’s neuromorphic processor. The function revolves around performing complex tasks on a digital input data, thus allowing AI to process images.

Clearly, investors have priced in a lot of good things to come for BrainChip, despite its sky-high valuation.

BrainChip share price snapshot

Over the last 12 months, BrainChip shares have gained more than 280%. The company’s share price reached an all-time high of $2.34 yesterday, before treading lower due to profit-taking.

When looking at valuation grounds, BrainChip has a market capitalisation of around $3.65 billion, with around 1.71 billion shares outstanding.

Should you invest $1,000 in BrainChip right now?

Before you consider BrainChip, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and BrainChip wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Technology Shares

a man sits in casual clothes in front of a computer amid graphic images of data superimposed on the image, as though he is engaged in IT or hacking activities.
Technology Shares

2 ASX tech shares I would buy after the heavy sell-off

Here are two ASX tech shares that have taken a battering this year but I think could be compelling ideas.

Read more »

A man in a business suit plunges down a big square hole lit up in blue.
Technology Shares

The BrainChip share price just plunged 8%, what happened?

BrainChip shares were down 8% at one point today. What on earth is going on?

Read more »

two computer geeks sit across from each other with their laptop computers touching as they look confused and confounded by what they are seeing on their screens.
Technology Shares

What’s happening with ASX 200 tech shares today?

Growth shares are more sensitive to interest rate hikes as they're often priced with distant future earnings in mind.

Read more »

A woman looks quizzical while looking at a dollar sign in the air.
Technology Shares

This ASX 200 tech share has $380 million in cash and no debt but has fallen 32% this year. Is it a bargain?

Here's what experts are predicting for WiseTech stock.

Read more »

businessman takes off with rockets under feet
Technology Shares

Here’s why the Reckon share price is booming 50% on Thursday

Following the sale of its Accountants Practice Management Group, the ASX software company will focus on its most profitable divisions.

Read more »

a headshot of james gerrish in an office setting.
Technology Shares

Why this ASX 200 share is my biggest personal holding: fund manager

In a rare insight, a prominent stock expert just revealed the largest holding of his own personal portfolio.

Read more »

Share Gainers

Why did the Dubber share price push 18% higher today?

Dubber shares have bounced from yearly lows.

Read more »

a group of people gathered around a laptop computer with various expressions of interest, concern and surpise on their faces. All are wearing spectacles.
Technology Shares

You won’t find more profitable ASX tech shares than these companies right now

Profitability is taking centre stage, but which tech companies are delivering?

Read more »