Barack Obama wore them on walks. Leonardo DiCaprio invested in them and called them a model for the entire footwear industry. Gwyneth Paltrow, Oprah Winfrey, and a whole host of Silicon Valley tech billionaires bought them as a badge of understated luxury. For years, Allbirds symbolized an era when simply adding the word "sustainable" was enough to make customers line up.
The company has now announced that it is leaving the footwear business for good and pivoting to artificial intelligence. The market's reaction was extreme, with shares soaring more than 580 percent in a single trading day. From around $2.50 to nearly $17.
A Rise That Did Not Last
The story of Allbirds began in 2015, when two seemingly unlikely partners joined forces. Tim Brown, a former professional soccer player, and Joey Zwillinger, an expert in renewable materials. Together, they wanted to make shoes that were not made from petroleum. The result was the Wool Runner, a simple merino wool sneaker that became almost a uniform in the Rome of technology, as San Francisco is sometimes nicknamed.
In 2021, Allbirds went public on the Nasdaq. At the time, the company reached a valuation of more than $4 billion. The recipe for success seemed clear: sustainability, simplicity, and Silicon Valley as its first customer. But then came the decline.
Revenue fell year after year. Between 2022 and 2025, revenue nearly halved, from $298 million to $152 million. The company tried to expand its product range with $250 wool jackets and $88 dresses. But customers bought neither. Unsold inventory piled up, and the company had to sell it at discounts that ate into its profits.
In 2024, Allbirds received a warning from Nasdaq because its shares had traded below one dollar for more than thirty consecutive days. To avoid being delisted, the company consolidated several existing shares into one, raising their price on paper. Temporarily.
From Sneakers to Graphics Chips
In January of this year, Allbirds announced the closure of all its brick-and-mortar stores in the U.S. The last store closed in February. A month later came the news that closed the chapter entirely: the company sold its brand, inventory, and customer relationships to American Exchange Group for $39 million.
American Exchange Group is a management company specializing in fashion and accessories, with brands such as Ecko Unltd and Aerosoles under its umbrella. It will continue to sell shoes and clothing under the Allbirds name. But the original company retained the most valuable asset it had left: its listing on the U.S. Nasdaq exchange, where its shares still trade under the ticker BIRD. And it decided to put this empty shell to a different use.
The company's new identity was named NewBird AI. At first glance, the plan is surprising: the company wants to buy high-performance graphics processing units, known as GPU chips, and lease access to them to customers under long-term contracts. In other words, Allbirds wants to become a provider of computing power for companies developing or operating artificial intelligence systems. This market segment is sometimes referred to as GPU-as-a-Service, meaning the provision of graphics processing power as a service.
The company announced that it had secured up to $50 million in financing from an as-yet-unnamed institutional investor. The funds are expected to arrive in the second quarter of this year, although the entire transaction still requires shareholder approval. "The surge in artificial intelligence development and adoption has created unprecedented structural demand for specialized, high-performance computing capacity that the market cannot meet," the company said in a statement. "NewBird AI is being created to help close this gap."
Meme Stock or Serious Business?
Analysts and commentators have reacted with considerable skepticism. Retail analyst Hitha Herzog described the surge in the stock as a textbook example of a "meme stock," meaning a security whose price rises not because of the company's actual performance, but because of viral investor interest on social media. All it took was adding the word AI to the press release, and the market went crazy, she commented.
Branding consultant Wei Kan of Conduit Asia compared the entire maneuver more to a "liquidation" than a turnaround. In his view, the company is simply using the publicly traded shell of its footwear predecessor to enter an entirely unrelated industry.
Jim Cramer of CNBC put it succinctly: "It's absurd." The comparison immediately evokes a parallel with 2017, when iced tea maker Long Island Iced Tea added the word "blockchain" to its name and saw its shares rise by hundreds of percent overnight. Or with Kodak, which announced its own cryptocurrency, KodakCoin, and experienced a similar stock market frenzy.
A Small Player on a Very Expensive Playing Field
Even if the plan is entirely serious, one fundamental problem stands in the way: $50 million is a laughably small sum in the world of AI infrastructure.
For example, CoreWeave, which operates a similar business, plans to spend between $30 billion and $35 billion this year to expand its capacity. Even the smaller company Nebius plans to invest between $16 billion and $20 billion. NewBird AI is entering this environment with a fraction of those resources and will compete for graphics chips sought after by the industry's biggest and wealthiest players.
GPU chips from Nvidia, which dominates the market, are in extremely short supply. Nvidia itself rode the wave of demand for AI hardware to become the world's most valuable company, with a market capitalization approaching $5 trillion. Allbirds, or rather NewBird AI, is starting from a market capitalization that, before the announcement, stood at only around $21 million.
The pivot to AI also represents a symbolic break that the Guardian described as remarkable. From the outset, Allbirds was a certified B Corporation, meaning a company with a legally enshrined obligation to consider the environment and society. NewBird AI is abandoning this certification. In a filing with the U.S. Securities and Exchange Commission, the company acknowledged that the new entity "will be less focused on public benefit in the area of environmental protection." That is a somewhat ironic conclusion for a company that marketed its first wool model as an alternative to shoes made from petroleum and plastics.
Leonardo DiCaprio, one of Hollywood's most prominent environmental activists, invested in Allbirds in 2018 and praised the company as a model for the entire industry. Neither he nor the company has said what he now thinks about the pivot to artificial intelligence infrastructure.
Sources: wsj.com and nytimes.com
