What an extraordinary week the BrainChip Holdings Ltd (ASX: BRN) share price has had. It was only last Thursday that Brainchip shares touched a new 52-week low of 40.5 cents per share.
But thanks to Friday's remarkable 7.3% surge, together with yesterday's still-impressive rise of 4.6%, Brainchip shares last traded at 45.5 cents each. That means that the Brainchip share price has surged 12.35% in just two full trading days:
Of course, it's not all sunshine and rainbows for Brainchip shares. This ASX artificial intelligence share remains down a painful 39.3% year to date. As well as by 50% over the past 12 months. And we are still about 75% below the all-time highs of over $1.75 a share that we saw back in early 2022.
But let's not dwell too much on that. So why are Brainchip shares having such a top run over the past few days?
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Why have Brainchip shares bounced 12% in two days?
Well, it's not exactly clear, unfortunately. There have been no developments or news out of Branchip for a few weeks now. So the stellar performance of the last few days has got nothing to do with the company itself.
So perhaps investors just decided that the new lows we saw last week had gone too far. As we can tell from the company's performance over the past year, investors seem to be disillusioned with Brainchip's trajectory and have been drifting away from the company's shares for a while.
But disillusionment like this sometimes pushes a share too low and gets to a point of potentially undervaluing the company. Perhaps investors have decided that this situation now applies to the Brainchip share price, and have revalued the company accordingly.
This seems likely, seeing as the company's largest gains came last Friday – a day when most ASX shares were getting panned by the market. So it doesn't seem like the Brainchip share price's performance in recent days can be explained by the company just getting caught up in the good mood of the market.
Brainchip is also one of the most short-sold ASX shares on the market, as we reaffirmed yesterday. When a heavily shorted share rises in value, it can create what's known as a short squeeze.
This forces some short sellers to close out their positions, which results in fresh buying activity. This then pushes up the price of the shorted company's shares.
This could also be playing a role here.
So these factors are the most likely explanation as to why the Brainchip share price has had such a pleasing few days. Let's see what the rest of the week brings for this ASX artificial intelligence share.
