Brainchip Holdings Ltd (ASX: BRN) shares are enjoying a big lift today, up 5.8% in late afternoon trade.
Shares in the ASX artificial intelligence chip maker closed up 6.2% on Friday, trading for 43 cents. Shares are currently swapping hands for 46 cents apiece.
Despite the two strong trading days, Brainchip shares remain down a painful 60% since this time last year.
Can the AI tech stock make a comeback?
Image source: Getty Images
Will the revenue cart ever get ahead of the research horse?
Following the huge retrace in Brainchip shares over the past 15 months, investors reacted to the company's annual general meeting presentation last Tuesday by sending the share price plunging 17.7% at market close.
Brainchip has been spending big on research and development of Akida. That's its AI processor which uses neuromorphic principles to mimic the human brain. But the revenue end has, as yet, been lacking.
"Let me be clear, nobody at Brainchip is happy or content with our current position. We haven't hit any significant stride yet with respect to revenue," Brainchip chairman, Antonio Viana said at the AGM.
"We haven't had a product that can see its way into end production systems," Viana added.
Addressing the woeful performance of Brainchip shares over recent months, CEO Sean Hehir said Akida 1.0 is "at leadership levels of performance and power".
However, he noted that the areas where Akida could prove useful already had existing "good enough" solutions in place.
So, what might see Brainchip shares come roaring back?
Well, the company is putting a lot of its eggs in the Akida 2.0 basket.
With the upgraded version, Hehir said:
We can now supercharge the edge AI device to efficiently run complex AI computation, untethered from the cloud, and without CPU intervention, and reduced system load.
In a big week for the ASX tech stock, on Thursday the outlook for Brainchip shares got a little brighter.
That's when the company reported it had received a US patent protecting a learning function of its digital neuron circuit. The circuit uses positive and negative synapses "inspired by the biological brain".
Brainchip said it considered the US patent "a valuable IP asset that will block competitors from adopting Brainchip-style learning on a neuromorphic chip or a system".
Of course, the Aussie tech company is up against some stiff international competition.
As The Motley Fool's James Mickleboro pointed out last week:
When it comes to artificial intelligence, Nvidia (NASDAQ: NVDA) 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.
So, for Brainchip shares to come storming back, Akida will need to be superior, at least for some specific applications, to what Nvidia comes out with.
That, or the ASX tech share might find itself a takeover target, which might also see the share price charge higher.
How have Brainchip shares performed longer-term?
Brainchip shares hit all-time highs of $2.13 on 19 January 2022.
The company has struggled since then, with shares down so far in 2023.
Investors who bought the tech stock five years ago, however, will still be sitting on gains of 250%.
