BrainChip market cap is ‘not even close to where it can and should be’: CEO

BrainChip’s CEO believes the company has a bright future…

| More on:
A man looks stunned as a cloud explodes from his head representing the CogState share price crashing today in

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

On Wednesday morning, the BrainChip Holdings Ltd (ASX: BRN) share price is pushing higher.

At the time of writing, the artificial intelligence technology company’s shares are up 1% to $1.01.

Based on its shares outstanding, this means that BrainChip’s market capitalisation is now over $1.7 billion.

CEO tips market capitalisation to increase

While a market capitalisation of $1.7 billion for a company with next to no revenue seems ridiculous, particularly in the current environment, BrainChip’s CEO, Sean Hehir, feels it is justified. He also believes it can and should keep increasing.

In a recent interview with CommSec, Mr Hehir was asked about the company’s profitability and lofty market capitalisation.

He responded:

Do I think the market cap is fair? Or they say are you topped out? I think it is not even close.

The reason I say that is the [AI] market itself. The market is very, very big. And so we have got a lot of room to grow. So, I think the market cap is not even close to where it can and should be over time.

Mr Hehir did, however, shy away somewhat from the question about profitability. He instead focused on the company’s partnerships and said the company intends to establish more and make them “much deeper, more operational every single day to drive a lot of value.”

What about the long term?

Looking longer term, BrainChip’s CEO revealed that his aim is to build the company into the “de facto standard for edge AI for the entire world.”

Questioned on how the company can achieve this given the big budgets of its tech giant rivals, Mr Hehir said that he believes BrainChip’s small size means it is nimble and can react quickly. He also feels that its patent portfolio is strong and “very defensible.”

Time will ultimately tell if BrainChip is the real deal or just another tech wannabe that gets left behind by its big budgeted rivals. But with a market capitalisation approaching $2 billion and no sales to demonstrate that there’s a market for its Akida technology, the market certainly has high hopes.

The next 12 months are likely to be incredibly pivotal now it is in the commercialisation stage. If meaningful sales don’t materialise, the BrainChip share price could easily fall from grace. This makes it a very high risk option for investors and too spicy for my tastes.

Motley Fool contributor James Mickleboro 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 Scott Phillips.

More on Technology Shares

An older woman with grey hair and wearing glasses looks at her laptop screen with her hand outstretched to demonstrate that she doesn't understand what she is reading
Earnings Results

Seek share price slides despite NPAT soaring 81%

How did Seek perform in the 2022 financial year?

Read more »

a man sits back from his laptop computer with both hands behind his head feeling happy to see the Brambles share price moving significantly higher today
Earnings Results

Life360 share price rises as revenue more than doubles

Life360 lands solid subscriber growth, but at what cost?

Read more »

A woman looks internationally at a digital interface of the world.
Technology Shares

Better ASX tech buy: Xero or Altium?

Let's put these two WAAAX shares to the test.

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Consumer Staples & Discretionary Shares

2 surprisingly ‘robust’ ASX shares to buy in current climate: expert

Real estate and consumer discretionary sectors might be the first to suffer as interest rates rise. But here are a…

Read more »

Two people shaking hands in the boardroom on a merger.
Technology Shares

Guess which ASX All Ords share just inked a new deal with Fortescue

Sadly, the deal hasn't been enough to save the ASX All Ordinaries share from the red.

Read more »

A woman shrugs and pulls awkward expression with her face.
Materials Shares

Is Novonix considered an ASX lithium share?

Can Novonix be considered an ASX lithium stock?

Read more »

One young boy jumps off a step ladder and is captured mid-air about to land on a seesaw where his friend is standing with a wide smile on his face looking at the camera and holding his thumbs up as though he is excited for the ride to come. Both young boys are wearing business suits.
Mergers & Acquisitions

Nearmap share price jumps 30% on takeover news

The Nearmap share price rallied 33% to $2.01 in early trade on Monday, but remains below the bid price.

Read more »

A group of five people dressed in black business suits scrabble in a flurry of banknotes that are whirling around them, some in the air, others on the ground as some of them bend to pick up the money.
Technology Shares

2 ASX tech shares about to go cash-flow positive

After massive interest rate rises, using your own cash to operate is so much better than borrowing to survive.

Read more »