Allbirds’ 700% Stock Surge After AI Pivot: What’s Behind the Wild Turnaround?

In the world of stock markets, three words can sometimes work like magic: “pivot to AI.”

Allbirds, a once-dominant shoe brand now struggling to stay afloat, announced it is closing a $50 million deal to transform into NewBird AI. The company plans to purchase hard-to-obtain AI chips and offer computing power to tech startups through a “fully integrated GPU-as-a-Service” model. While the move is being called a reinvention, it’s more of a complete 180-degree shift from its original business.

Just two weeks prior, Allbirds sold off its intellectual property and other assets in a fire sale, shutting down its footwear operations for a mere $39 million. This figure is a stark contrast to its former valuation of $4 billion just five years ago. Yet, the promise of riding the AI wave has seemingly erased its financial troubles—at least for now.

Following the announcement, Allbirds’ stock skyrocketed by over 700%, briefly peaking at around $17 per share before settling. This surge marked a dramatic turnaround from its opening price of under $7 earlier in the day.

The company’s rapid transformation highlights a growing trend in the stock market, where investors are increasingly chasing AI-related opportunities, often overlooking traditional business fundamentals. The AI industry continues to pour tens of billions into infrastructure, despite limited evidence of profitability, fueling concerns about an AI bubble.

“If you don’t believe we are in a bubble you are in denial.”

Investors appear more interested in speculative bets than in sustainable growth, as evidenced by Allbirds’ sudden rise. The company now claims it will “acquire high-performance, low-latency AI compute hardware” to meet the demands of desperate AI firms. Access to computing power has become a status symbol in Silicon Valley, with OpenAI boasting plans to bring tens of gigawatts of compute online by the end of the decade—enough to power millions of U.S. households. This ambition far outpaces rival Anthropic’s goals.

The announcement left many bewildered, sparking widespread mockery on social media. David Corn, journalist for Mother Jones and MSNBC correspondent, joked on Bluesky:

“I like my Allbirds. I just don’t need for them to predict stock market trends for me.”

Ben Collins, CEO of The Onion, sarcastically tweeted:

“Nothing says ‘America is Back Baby!’ like ‘Allbirds became an AI hardware middleman because they wanted to pump their stock instead of going into bankruptcy, so they said they will find some computer chips somewhere, but can no longer sell shoes.’”

For more on the AI bubble, read: You’ll Snort-Laugh When You Learn How Much AI Actually Added to the US Economy Last Year.