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    Butterfly Network (BFLY) Is Down 9.5% After Exclusive Brain-Computer Interface Chip Licensing Deal

    Simply Wall St·09/02/2026 01:21:47
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    • In the past few days, Merge Labs announced a multi-year licensing agreement granting it access to Butterfly Network’s Poseidon Family Ultrasound-on-Chip technology for ultrasound-based brain-computer interfaces, with Butterfly as its exclusive CMOS-MEMS chip-based ultrasound partner and eligible for upfront, milestone, and future royalty payments.
    • This deal highlights a new application for Butterfly’s chip technology in neural interfaces, potentially broadening the use cases for its ultrasound platform beyond traditional diagnostics.
    • We’ll now examine how becoming Merge’s exclusive ultrasound chip partner for brain-computer interfaces could influence Butterfly Network’s existing investment narrative.

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    Butterfly Network Investment Narrative Recap

    To own Butterfly Network, you need to believe its ultrasound-on-chip platform can scale across both core medical imaging and new, higher-value software and licensing uses. The Merge Labs brain-computer interface deal reinforces that platform story, but it does not immediately change the key near-term catalyst, which is execution against raised 2026 revenue guidance, or the biggest risk, which remains ongoing operating losses and the cash needs tied to heavy R&D and commercialization spending.

    The Merge agreement also connects to Butterfly’s recent FDA-cleared Gestational Age AI tool and broader AI roadmap, which aim to increase the software and services mix over time. Together with the Beam Steering API and Butterfly Garden ecosystem, these moves underline why some investors focus on software and licensing as potential margin drivers, even as today’s revenue is still heavily weighted to hardware and depends on large enterprise and international deployments actually materializing.

    Yet, against all this promise, investors still need to be aware of the risk that shrinking software contribution and heavy cash burn could...

    Read the full narrative on Butterfly Network (it's free!)

    Butterfly Network's narrative projects $206.0 million revenue and $25.0 million earnings by 2029. This requires 22.5% yearly revenue growth and a $99.8 million earnings increase from -$74.8 million today.

    Uncover how Butterfly Network's forecasts yield a $9.31 fair value, a 14% upside to its current price.

    Exploring Other Perspectives

    BFLY 1-Year Stock Price Chart
    BFLY 1-Year Stock Price Chart

    Some of the most optimistic analysts were already modeling roughly 33 percent annual revenue growth and eventual margins near industry levels, while also flagging shrinking software mix as a key risk; the new Merge deal might support that upside view, but it also reminds you that opinions differ widely and that expectations for high growth and improving profitability can change quickly as new information arrives.

    Explore 6 other fair value estimates on Butterfly Network - why the stock might be worth as much as 34% more than the current price!

    Reach Your Own Conclusion

    Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts.

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    This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.