Why did the BrainChip share price spike 7% this morning?

We check what may have been behind the jump in the AI company’s share price earlier today.

| More on:
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.

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

It’s been a pretty bleak day for most ASX shares so far this Monday. At the time of writing, the S&P/ASX 200 Index (ASX: XJO) has lost 0.71% and is now back in the low 6,400s. But no one seems to have told the BrainChip Holdings Ltd (ASX: BRN) share price.

Brainchip shares are having a fairly wild day today. The company is presently flat at 90.5 cents a share, right on where it closed at last week. But at market open this morning, Brainship shares spiked dramatically. This artificial intelligence (AI) company jumped to 96 cents a share soon after trading commenced today.

At the time, that was a rise of 6.67%.

So what’s going on with this ASX tech share today?

Why is the Brainchip share price going haywire today?

Well, we can’t be too certain. Brainchip hasn’t come out with any ASX announcements itself but today is a rather big day for Brainchip. It’s the day that the company has officially joined the S&P/ASX 200 Index (ASX: XJO).

The ASX 200 is the flagship index of ASX shares. It tracks the 200 or so largest companies on our share market, ordered and weighted by market capitalisation. Since the values of ASX shares change every day, the index’s provider rebalances the index every three months to ensure that the ASX 200 always reflects the largest companies at the time.

As it happens, Brainchip has made the cut for the first time, helped no doubt by the company’s meteoric near-70% rise in value over the past 12 months. The results of the latest quarterly ASX 200 rebalance were announced back on 3 June and take effect from today.

This saw Brainchip included in the ASX 200, alongside other shares like Core Lithium Ltd (ASX: CXO) and New Hope Corporation Limited (ASX: NHC). They take the place of other ASX shares like Appen Ltd (ASX: APX) and Codan Limited (ASX: CDA), which have now been kicked out of the ASX 200.

ASX 200 inclusion (and exclusion) can have a meaningful impact on a company’s share price. It moves a share towards the centre of the ASX investing universe, and also potentially enables additional investment from fund managers and index funds.

So it’s possible that the gyrations we’ve seen in the Brainchip share price today could be the result of this rebalancing taking effect.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Appen Ltd. 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

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Earnings Results

Nuix share price tumbles following $23m loss in FY22

Nuix shares dropped into the red on Thursday...

Read more »

Young man in shirt and tie staring at his laptop screen watching the Paladin Energy share price tank today
Earnings Results

Codan share price sinks 10% despite record profit

How did Codan track for the 2022 financial year?

Read more »

A gold bear and bull face off on a share market chart
Technology Shares

Does the bull beat the bear for this ASX tech share?

Let's take a look at the bull and bear cases for this ASX tech share.

Read more »

A boy is about to rocket from a copper-coloured field of hay into the sky.
Technology Shares

Guess which ASX tech share is soaring 16% on a new Google deal

This tech share has had a great past 12 months.

Read more »

Man ponders a receipt as he looks at his laptop.
Technology Shares

Xero share price dips 5% on weaker UK performance

The ASX market darling is feeling the heat after providing an update at its AGM.

Read more »

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.
Earnings Results

Data#3 share price dips despite 19% leap in FY22 dividend

The ASX tech share said ongoing supply chain issues had impacted its performance over the year.

Read more »

A hipster looking man with bushy beard and multiple arm tattoos sits on the floor against a sofa reading a tablet with his hand on his chin as though he is deep in thought.
Industrials Shares

Why did the Novonix share price nosedive 6% today?

We check what happened to shares in the battery material technology company on Wednesday.

Read more »

a man sits at a computer in deep thought with hand on chin in a darkened room as though it is late and night and he is working on cybersecurity issues.
Earnings Results

ReadyTech share price slips despite earnings increase

The software as a service provider has notched a solid year.

Read more »