'Peak silliness': Here's what investing pros think of Allbirds' pivot from shoes to AI

• Allbirds' stock surged on news that the company is leaving behind the shoe business for AI.
• Wall Street pros have voiced skepticism about the move.
• Some see Allbirds' strategy to win back investors reminiscent of dot-com-era bubble trends.

Allbirds became a meme stock this week after announcing a plan to leave sneakers behind and enter the world of AI infrastructure.

The stock saw stunning gains of more than 800% on Wednesday, but the rally waned on Thursday. Shares fell as much as 30% in the session.

Allbirds sold its shoe business for $39 million at the end of March, and is now planning to use a $50 million convertible financing facility to break into the world of AI computing infrastructure. It's a big business, to be sure, but much larger companies in the space, like CoreWeave, have faced challenges and volatility in both their stock and bonds.

One advantage may be that Allbirds—which is now NewBird AI—is getting into the game at a time when commentators are voicing concern that the supply of critical compute infrastructure is lagging demand. Still, it's an audacious plan of the kind many other companies have tried before (remember Long Island Blockchain Corp?).

Here's what investing pros have been saying about Allbirds' AI pivot:

Allbirds' AI bet is "peak silliness"

"Going from selling wool sneakers to chasing AI compute might be one of the wildest pivots this cycle," Futurum's chief market strategist, Shay Boloor, said.

Futurum CEO Daniel Newman reacted, saying it's "the most ridiculous pivot I've ever seen." The analyst flagged that Allbird's surge came as funds flowed out of what he called "more legitimate AI REITs," like CipherMining, TeraWulf, and IREN Limited.

"This will end badly. $50 million to build an AI cloud. Peak silliness," Newman posted as the stock surged.

Dot-com bubble echoes

Liz Ann Sonders, Schwab Center for Financial Research's chief market strategist, said she was skeptical.

"I have no skin in the game and don't cover individual stocks, but this AllBirds story of a struggling consumer brand with a recognizable name using a public shell to access a hot thematic narrative … the business doesn't matter, only the association does; in the '90s it was internet commerce; now it's GPU infrastructure."

Mark Malek, investment chief at Siebert Financial, also made comparisons to the dot-com times, noting that companies that are betting on endless demand for resources like AI compute are asking for trouble.

"The burst will come," he said.

"A drop in the bucket"

William Blair analysts published a note following the news notifying clients that they were dropping coverage of Allbirds on the AI strategy shift.

"This is by any measure a Hail Mary… And yet, shares have gone hyperbolic, trading at an enterprise value around $140 million on the news from closer to $10 million prerelease."

"There is no valuation metric here with the wind-down of the footwear business and deep uncertainty about its new endeavors in cloud compute," they added.

The analysts mention that the $50 million the company plans to use to fund its shift into AI infrastrucutre is "a drop in the bucket in the broader neocloud market, where most companies run capex budgets well into the billions of dollars. "

BIRD soars as stock market hits fresh record high

Citrini, the research firm behind the hypothetical AI doomsday scenario that rattled investors earlier in the year, joked, "Can we please wait until we're like at least 5% above previous all time highs to start doing this" about Allbird's massive surge.

"When a company that sold its shoe brand for $39 million—less than ten cents on the dollar of its peak valuation—can add a $127 million of market capitalization in a single trading session simply by announcing a pivot to GPU leasing, the market is not pricing risk," Financial's Mark Malek said.