Wall Street and the retail industry were shocked when shoe company Allbirds announced on Wednesday that it would be shifting its focus from shoes to artificial intelligence infrastructure. This caused the stock price to skyrocket by more than 500% in just one trading session.
The San Francisco based company, which used to be famous for its eco-friendly wool trainers and star fans, said it was going to change its name to “NewBird AI” and base its business model on AI computing power. As soon as the news came out, investors became very interested. Shares of the failing company rose as much as 582 percent in one day, making it one of the most heavily traded stocks on the market.
Who is in charge of Allbirds?
Allbirds was started by Tim Brown and Joey Zwillinger in 2015. The company is based on ecology and makes shoes from natural materials like merino wool.
Its simple designs quickly caught on, especially among workers in Silicon Valley, and got support from famous people like Leonardo DiCaprio.
After going public on the Nasdaq in 2021, the company was worth more than $3–4 billion at its peak. But things quickly turned around in the years that followed. Sales dropped significantly, competition grew tougher, and it cost more to acquire new customers.
From 2022 to 2025, sales dropped almost in half, from $298 million to $152 million, while losses grew, including a recent $20.3 million deficit.
In response, the company reduced its physical presence. It closed its US retail shops earlier this year and started focusing on online partnerships.
At its peak, the stock price was over $500. Before the AI release, it fell below $3, losing almost all of its value.
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How does Allbirds plan to switch to AI?
The company is changing mainly to get into the AI infrastructure business, which is growing very fast. It has received a $50 million convertible loan from an institutional backer. The money will be used to buy graphics processing units (GPUs), which are important pieces of hardware for training and launching AI models.
According to the company, the rise in AI development and use has created a huge need for specialised, high performance computing that the market is having a hard time meeting.
NewBird AI is being made to help fill that void
At first, the company wants to buy high performance, low latency computer gear and let customers rent access under long term contracts. It wants to grow into a full fledged provider of AI-native cloud solutions and GPUaaS over time.
In its statement, the company said, “At first, the Company will 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.”
A basic change in the company’s character is also part of the move. Allbirds wants to stop being a public benefit company, which meant that it focused on environmental goals, and start running as a normal for profit business with a stronger focus on technology infrastructure.
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What about the shoes Allbirds wear?
The shift is part of a larger attempt to restructure. American Exchange Group has decided to pay Allbirds about $39 million for its brand, intellectual property, and apparel assets.
As part of the deal, the new owner will continue to run the Allbirds name in the fashion market.
The switch to NewBird AI still needs shareholder approval, and a vote is likely in the next few weeks. If the deal goes through, it will split the company’s history as a store from its future as a tech focused business.
Is this just a market fad that will end
The news comes at a time when investors are increasingly excited about artificial intelligence, especially in key areas such as data centers and chips.
As the need for computing power soars, companies that make AI tools, like Nvidia, have seen their share prices rise.
The change Allbirds made seems right on target with this trend. Its stock price went up thanks to activity from both big investors and individual buyers. This is similar to the “meme stock” trend that became popular during the COVID-19 pandemic.
Analysts and people who follow the business have expressed doubts about the move, though.
“It looks like an attempt to make money off of the interest in AI.” A store expert named Bruce Winder told Reuters, “I don’t see how Allbirds brings anything to the table other than name recognition.”
Some branding experts say the change is more like a company restart than a normal progression of the business model.
People have also made comparisons to times when companies that were having trouble renamed themselves around popular technologies, like blockchain during the cryptocurrency boom, to get investors interested again.
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Can Allbirds do well with AI
The AI infrastructure industry has a lot of room to grow, but it also requires significant investment and is highly competitive. It takes a lot of money, technical know how, and long term customer agreements to build and run GPU based computer networks.
Allbirds’ plan depends on fixing what it calls a mismatch between supply and demand in AI computing power. The business thinks that many businesses can’t get to stable, high performance computer tools through the routes that are already in place. If it succeeds, NewBird AI wants to be known as a company that offers on demand computing power and cloud services that are specifically designed for AI tasks.
But it’s still unclear whether this turn will work in the long run.
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