Here's why the Brainchip share price is having another day to forget

It's been a tough year for Brainchip shareholders.

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The BrainChip Holdings Ltd (ASX: BRN) share price is well into the red on Monday.

Shares in the ASX artificial intelligence (AI) chip maker closed Friday trading for 29.5 cents. At time of writing, shares are changing hands for 28.7 cents apiece, down 2.7%.

That's more than four times the 0.6% losses posted by the All Ordinaries Index (ASX: XAO) at this same time.

Here's why the Brainchip share price is getting hammered again today.

Why is the Brainchip share price falling on Monday?

Atop the wider sell-off today, the ASX AI stock is facing additional headwinds on the heels of today's S&P Dow Jones Indices quarterly rebalance.

The Brainchip share price has plummeted 62% in 2023. And shares are down 84% from the highs reached in January 2022.

That's seen the tech company's market cap dwindle to around $506 million at current prices.

The big valuation fall saw the stock booted from the S&P/ASX 200 Index (ASX: XJO) in the latest rebalance, effective this morning.

Now there's no direct impact on the company's business from this rebalance.

However the Brainchip share price is under some extra pressure as the company's shares will no longer be included in a range of index tracking funds intended to mimic the performance of the ASX 200.

A lot of fund managers are also limited to investing in companies listed on the ASX 200. Some of these fundies may be offloading their holdings today. Others won't be able to buy the AI stock over the coming months, even if they believe it's trading for a bargain.

Why have ASX investors been selling the ASX tech share?

The Brainchip share price soared to all-time highs in January 2022 amid investor exuberance over the potential of the company's neural network chips.

Unfortunately for shareholders, particularly those who bought in near those highs, the revenue end of the picture has been decidedly elusive.

The company reported its half-year results on 28 August.

Revenue for the six months came in at a piddly US$116,000, dwarfed by a 30% year on year increase in total expenses of US$16.85 million.

The Brainchip share price closed down 10.8% on the day the company reported those results.

Motley Fool contributor Bernd Struben 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.

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