How a shoe brand’s decision to ditch sneakers and become an AI firm saw stocks surging 500%

In a move that has stunned both Wall Street and the retail industry, footwear company Allbirds on Wednesday announced a dramatic pivot away from shoes and into artificial intelligence infrastructure — triggering a meteoric surge in its stock price of more than 500 per cent in a single trading session.

The San Francisco-based firm, once known for its eco-friendly wool sneakers and celebrity following, revealed plans to rebrand itself as “NewBird AI” and reposition its business model around AI computing capacity.

The announcement immediately ignited investor interest, sending shares soaring as much as 582 per cent intraday and turning the struggling company into one of the market’s most actively traded stocks.

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Who is behind Allbirds?

Founded in 2015 by Tim Brown and Joey Zwillinger, Allbirds built its identity around sustainability, producing footwear from natural materials such as merino wool.

Its minimalist designs quickly gained traction, particularly among Silicon Valley professionals, and attracted high-profile backers including Leonardo DiCaprio.

At its peak, the company was valued at over $3-4 billion following its Nasdaq debut in 2021. However, the years that followed saw a sharp reversal. Sales declined significantly, competition intensified, and customer acquisition costs rose.

Between 2022 and 2025, revenue nearly halved — from $298 million to $152 million — while losses mounted, including a $20.3 million deficit in a recent quarter.

The company responded by scaling back its physical footprint, shutting down its US retail stores earlier this year and pivoting toward online partnerships.

Its stock price, once above $500 at its peak, had collapsed to under $3 before the AI announcement, wiping out nearly 99% of its value.

How is Allbirds planning to pivot to AI?

The company’s transformation centres on entering the rapidly expanding AI infrastructure market. It has secured a $50 million convertible financing arrangement with an institutional investor, with funds earmarked for acquiring graphics processing units (GPUs) — critical hardware used in training and deploying AI models.

“The rise of AI development and adoption has created unprecedented structural demand for specialized, high-performance compute that the market is struggling to meet,” the company said in a statement.

“NewBird AI is being built to help close that gap.”

Initially, the firm plans to procure high-performance, low-latency compute hardware and lease access to customers under long-term agreements. Over time, it aims to evolve into a full-fledged provider of GPU-as-a-Service (GPUaaS) and AI-native cloud solutions.

“The Company will initially seek to acquire high-performance, low-latency AI compute hardware and provide access under long-term lease arrangements, meeting customer demand that spot markets and hyperscalers are unable to reliably service,” the company said in its announcement.

The shift also involves a structural change in corporate identity. Allbirds intends to move away from its status as a public benefit corporation — previously highlighting environmental goals — and operate as a conventional for-profit entity with a sharper focus on technology infrastructure.

What about Allbirds' shoes?

The pivot follows a broader restructuring effort. Allbirds recently agreed to sell its brand, intellectual property, and footwear assets to American Exchange Group for approximately $39 million.

Under the arrangement, the Allbirds brand will continue to exist in the fashion market, managed by the new owner.

The transition to NewBird AI remains subject to shareholder approval, with a vote expected in the coming weeks. If approved, the deal would effectively separate the company’s legacy retail identity from its future as a technology-focused enterprise.

Is this just a one-time market hype?

The announcement comes amid an ongoing surge in investor enthusiasm for artificial intelligence, particularly in infrastructure segments such as data centres and semiconductors.

Companies linked to AI hardware — most notably Nvidia — have seen massive valuations as demand for compute power skyrockets.

Allbirds’ pivot appears to tap directly into this trend. Its stock surge was fuelled not only by institutional activity but also by retail traders, echoing the “meme stock” phenomenon that gained prominence during the Covid-19 pandemic.

However, the move has also drawn scepticism from analysts and industry observers.

"It looks like an attempt to capitalize on the AI movement. I don't see how Allbirds brings anything to the table beyond name recognition," Bruce Winder, an independent retail consultant told Reuters.

Some branding experts are suggesting the shift resembles a corporate reset rather than a natural evolution of the business model.

Comparisons have also been drawn to past instances where struggling firms rebranded around trending technologies — such as blockchain during the cryptocurrency boom — to reignite investor interest.

Can Allbirds succeed in AI?

While the AI infrastructure sector offers enormous growth potential, it is also capital-intensive and highly competitive. Building and maintaining GPU-based computing networks requires significant investment, technical expertise, and long-term customer commitments.

Allbirds’ strategy hinges on addressing what it describes as a supply-demand imbalance in AI compute capacity. The company believes many enterprises are unable to access reliable, high-performance computing resources through existing channels.

If successful, NewBird AI aims to position itself as a provider of on-demand compute power and specialised cloud services tailored for artificial intelligence workloads.

Yet the long-term viability of this pivot remains uncertain.

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With inputs from agencies