It has been a difficult year for Brainchip Holdings Ltd (ASX: BRN) shares. Since the start of 2023, the struggling semiconductor company's shares have lost 42% of their value.
Remarkably, despite this decline, Brainchip still has a market capitalisation of $750 million even though it generates less revenue than some city cafes.
Going the other way this year has been the Nvidia (NASDAQ: NVDA) share price, which is up almost 170% year to date. This means Nvidia's market capitalisation is now nearing a whopping US$1 trillion.
Spare a thought for Nvidia's competitors, which must be quaking in their boots right now. Oh wait…
Could Nvidia destroy Brainchip?
When it comes to artificial intelligence (AI), Nvidia has proven itself to be the leader in the field.
Unfortunately for Brainchip, the AI behemoth's operations also cover edge AI. This is the market that Brainchip is targeting with its Akida chip. And while its first chip was a commercial flop, management continues to believe its technology is the best in the market.
But can it really compete with Nvidia? Probably not, for a number of reasons. But first, let's take a look at Nvidia's edge AI capabilities.
The Jetsons family
No, it's not that Jetsons family, it's a set of chips from Nvidia that look set to dominate the edge AI market. The company explains:
NVIDIA Jetson TX2 series modules give you exceptional speed and power-efficiency in an embedded AI computing device. Each supercomputer-on-a-module brings true AI computing to the edge with an NVIDIA Pascal GPU, up to 8 GB of memory and 59.7 GB/s of memory bandwidth, and a wide range of standard hardware interfaces.
The extended Jetson TX2 family of embedded modules provides up to 2.5X the performance of Jetson Nano in as little as 7.5 W. Jetson TX2 NX offers pin and form-factor compatibility with Jetson Nano, while Jetson TX2, TX2 4GB, and TX2i all share the original Jetson TX2 form-factor. The rugged Jetson TX2i is ideal for settings including industrial robots and medical equipment.
The TX2 4GB Module is of particularly interest here. As it this "embedded computer lets you run neural networks with double the compute performance or double the power efficiency of Jetson TX1." Sound familiar?
But isn't Brainchip's Akida chip supposed to be better? Apparently so. Management claims its chip has better performance metrics than rivals.
However, that doesn't necessarily guarantee sales. Far from it!
If a trusted company like Nvidia has a product on the market that offers "exceptional speed and power-efficiency in an embedded AI computing device", that will be more than enough for the majority of users. So, why would you take a risk on a product from a company with no track record and a tiny support team? You probably wouldn't.
This could mean the future is very bleak for Brainchip and its shares. After all, if the company doesn't generate meaningful revenue in the near future, it will continue to burn through its cash balance and be forced into raising more funds, diluting shareholders yet again, and putting ever more pressure on its share price. Could it ultimately go to zero? I wouldn't bet against it.
