Footwear Brand Allbirds Reinvents Itself as AI Company in Dramatic Market Pivot

Shares in footwear brand Allbirds famous for its wool content — once favoured by high-profile figures including actor Ben Affleck and former US President Barack Obama — surged last week after the company announced a dramatic shift from shoes to artificial intelligence (AI).

The San Francisco-based company revealed a $50 million (£37 million) deal to transform itself into an “AI compute infrastructure” business under a new name, NewBird AI.

The announcement sent Allbirds shares soaring more than 580%, although the company’s market value remains more than 90% below its 2021 listing valuation.

Known for its environmentally focused trainers and strong following among Silicon Valley technology workers, Allbirds has struggled financially in recent years.

In a statement, the company said NewBird AI will acquire advanced graphics processing units (GPUs) — the high-performance chips that power AI systems.

The company said it had identified a “gap in the market” as businesses worldwide compete for limited computing capacity amid surging AI demand.

Its long-term strategy is to provide on-demand GPU access and cloud services specifically designed for AI applications.

Meanwhile, the Allbirds footwear brand itself will be transferred to fashion conglomerate American Exchange Group, owner of labels including Ecko Unltd and Aerosoles, following a separate $39 million deal announced in March.

Allbirds chief executive Joe Vernachio said the transformation would allow the Wool Runner maker to “thrive in the years ahead”.

However, some analysts questioned the credibility of the pivot.

Branding consultant Wei Kan from Conduit Asia described the move as more of a “liquidation” than a genuine strategic shift, arguing the company was effectively using its stock market listing as a vehicle to enter an unrelated sector.

Retail analyst Hitha Herzog said investor enthusiasm generated “just by putting AI in an announcement” showed the stock was “clearly a meme stock”.

The meme stock phenomenon became prominent during the Covid-19 pandemic, when shares in certain companies surged due to intense interest from retail investors fuelled by social media activity.

“There is certainly AI mania that is going on,” Herzog said, noting the company has yet to demonstrate products or earnings tied to its new AI business.

Allbirds was founded in 2015 by former footballer Tim Brown and clean-technology entrepreneur Joey Zwillinger.

The company rapidly expanded, opening stores across the US and internationally, including in the UK, New Zealand, China and Singapore, targeting consumers seeking casual and sustainable footwear.

Despite its strong brand recognition, Allbirds has struggled to achieve profitability since listing on the Nasdaq in New York five years ago.

Its share price had fallen from a peak above $500 to around $2.50 before the AI announcement triggered the sharp rally.

“The announcement gives NewBird AI a shell to trade on,” Kan said, but cautioned that “a stock going from $3 to $17 on a press release doesn’t restore $4bn in destroyed value.”