Allbirds stock is already falling after the AI pivot. History suggests investors should proceed with caution

When a company goes from footwear to AI cloud solutions, eyebrows are bound to rise, but pivots are much easier to announce than to execute.

[Photo: Al Drago/Bloomberg via Getty Images]

After rising by more than 580% in a single trading session yesterday, shares of Allbirds Inc. (Nasdaq: BIRD) fell this morning in premarket trading, at one point more than 30%.

The steep rise and now potential fall in the stock price followed the company’s unexpected announcement that it intends to transition from a sustainable shoemaker to an AI compute infrastructure provider.

But while AI-obsessed investors initially cheered the odd move, history suggests the pivot may be a challenging one to pull off in the long run. Here’s what you need to know.

Yesterday, San Francisco-based Allbirds, whose wool footwear had been popular with Silicon Valley locals, announced something completely unexpected: it would stop making shoes and instead become yet another AI company.

Specifically, Allbirds said it will “pivot its business to AI compute infrastructure, with a long-term vision to become a fully integrated GPU-as-a-Service (GPUaaS) and AI-native cloud solutions provider.”

In other words, the company’s new business model will involve spending millions to buy GPUs, and it will then rent those GPUs out to AI developers. This GPU-as-a-Service (GPUaaS) model puts the former shoemaker against GPUaaS juggernauts like Amazon Web Services (AWS) and Microsoft Azure.

Allbirds will be changing its name to NewBird AI, while the “Allbirds” shoe brand will continue to be sold under its new owner, American Exchange Group (AXNY). Allbirds announced in March that it was selling its assets to AXNY for $39 million.

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