Allbirds shares rocketed on Wednesday after the struggling footwear brand unveiled plans to pivot into artificial intelligence and rebrand as NewBird AI.
The San Francisco-based company said it had struck a $50m (£37m) deal to become an “AI compute infrastructure”business, sending its stock soaring by more than 580 per cent in a dramatic market reaction.
Despite the surge, the company’s valuation remains more than 90 per cent below the level seen when it floated in 2021.
Once a darling of Silicon Valley, with its minimalist trainers worn by high-profile figures including Ben Affleck and Barack Obama, Allbirds built its brand around comfort, sustainability and casual everyday style.
But the brand has struggled to convert early hype into sustained profitability, with its shares tumbling heavily in recent years.
Under the new strategy, NewBird AI plans to acquire advanced graphics processing units (GPUs), the chips that power AI workloads, and position itself as a supplier of on-demand computing power and cloud services for businesses looking to build AI tools.
The company said it had identified a gap in the market, arguing that demand for AI infrastructure is outstripping supply and leaving businesses short of the computing power they need.
It’s a dramatic departure from Allbirds’ roots as a footwear brand.
Its consumer-facing brand has already been carved out, with American Exchange Group set to take ownership of Allbirds under a $39m deal announced in March.
American Exchange Group’s portfolio includes brands such as Ecko Unltd and Aerosoles.
Allbirds chief executive Joe Vernachio said the deal would allow the former Wool Runner maker to “thrive in the years ahead”.
However, the announcement has also drawn scepticism, with some questioning whether it’s a genuine strategic pivot or simply an attempt to capitalise on investor enthusiasm around AI.
Wei Kan, branding consultant at Conduit Asia, likened the deal to a liquidation rather than a pivot, arguing that the business is effectively using its listed shell to move into an entirely unrelated category.
Retail analyst Hitha Herzog was similarly blunt, describing the stock reaction as part of wider “AI mania” and suggesting the company had all the hallmarks of a meme stock.
Founded in 2015 by former footballer Tim Brown and clean-tech entrepreneur Joey Zwillinger, Allbirds expanded rapidly across the US and internationally, including the UK, New Zealand, China and Singapore.
Its understated trainers found favour with office workers, tech employees and wellness-conscious consumers, but mounting losses and weak market performance have weighed heavily on the business.
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