Allbirds’ (BIRD) surprising pivot to artificial intelligence this past week provided yet another reminder that the AI hype is real.
On Wednesday, the sustainable sneaker company once known for making Silicon Valley’s go-to shoe announced it was becoming an AI company. The stock, which hovered around $3 earlier this week, surged nearly 600% on Wednesday and closed the week above $10 per share.
How will Allbirds transform itself into an AI company? The details remain unclear, but the company said it aims to acquire high-performance AI compute hardware and lease it to customers whose demand is not met by hyperscalers or spot markets. It plans to go by the name “NewBirdAI.”
Experts say the sneaker company saw an opportunity to capitalize on FOMO, or the fear of missing out. It’s not the first time a company has jumped on a hot market trend to stay relevant.
This was a “Hail Mary to juice the stock,” said Matt Domo, an AI advisor and founding general manager of the AWS Database Division. Allbirds used this tactic to “froth the market and peak interest,” he said, because behind the AI hype is a real technology people are willing to invest in.
“Whether you call it a meme stock or not, I don’t know yet,” Siebert Financial chief investment officer Mark Malek told Yahoo Finance.
Many are skeptical that the company can actually make this pivot, given its lack of a clear roadmap, staff with this expertise, or adequate funding.
For the most part, Allbirds’ leadership team has deep experience in apparel, not AI, except for its chief technology officer, who served as TurboTax’s director of engineering nearly a decade ago.
Overhauling leadership, building data centers, and acquiring chips are extremely capital-intensive, Domo said. Whether they come out with a “magical plan” next week, “I’m pretty skeptical about that,” he added.
The company plans to raise $50 million, a drop in the bucket compared to the $650 billion in capex commitments from the four Big Tech hyperscalers — Microsoft (MSFT), Alphabet (GOOGL, GOOG), Amazon (AMZN), and Meta (META).
Allbirds-branded shoes will continue to be available through the American Exchange Group, the company behind Ed Hardy that purchased Allbirds’ footwear assets in late March for $39 million.
In the meantime, many are questioning whether this unlikely pivot signals a market bubble.
Malek said traders flocking to Allbirds shows “real problems at the fringe.” He pointed to the combination of easy capital, incentives for investment bankers, and a hot AI narrative that hasn’t cooled off.
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