Allbirds’ (BIRD) surprising pivot to artificial intelligence last week provided another reminder that the AI hype is real.
On Wednesday, the sustainable sneaker company once known for making Silicon Valley’s favorite shoe announced it would become an artificial intelligence company. The stock, which hovered around $3 earlier this week, rose nearly 600% on Wednesday and closed the week above $10 per share.
How will Allbirds transform into an AI company? Details are still unclear, but the company said it aims to acquire high-performance AI computing hardware and lease it to customers whose demand is not met by hyperscalers or spot markets. It plans to be called “NewBirdAI.”
Experts say the sneaker company saw an opportunity to capitalize on FOMO, or the fear of missing out. This is not the first time that a company has joined a market trend to remain relevant.
This was a “Hail Mary to improve the stock,” said Matt Domo, an AI advisor and founding general manager of AWS’s database division. Allbirds used this tactic to “buzz up the market and generate interest,” he said, because behind the AI hype is a real technology that people are willing to invest in.
“Whether it’s called 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 really make this turn, given the lack of a clear roadmap, personnel with this experience or adequate funding.
For the most part, Allbirds’ leadership team has deep expertise in apparel, not artificial intelligence, except for its chief technology officer, who served as TurboTax’s chief engineering officer nearly a decade ago.
Renewing leadership, building data centers and acquiring chips requires a lot of capital, Domo said. As for whether they will present a “magic plan” next week, “I’m pretty skeptical about it,” he added.
The company plans to raise $50 million, a drop in the bucket compared to the $650 billion in capex commitments from the Big Tech four hyperscalers: Microsoft (MSFT), Alphabet (GOOGL, GOOG), Amazon (AMZN), and Meta (META).
Allbirds-branded shoes will continue to be available through American Exchange Group, the company behind Ed Hardy that purchased Allbirds’ footwear assets in late March for $39 million.
Meanwhile, many are wondering if this unlikely turn indicates a bubble in the market.
Malek said traders flocking to Allbirds show “real problems at the margin.” He pointed to the combination of easy capital, incentives for investment bankers and a hot AI narrative that hasn’t cooled down.
