It was not a joke. The shoe company Allbirds announced last week that it is pivoting to artificial intelligence, a sign that the AI bubble is about to pop. Or maybe the tech optimists are right and everything is AI now.
The company was “once the maker of Silicon Valley’s favorite shoe,” said The New York Times. Allbirds was previously valued at $4 billion, but the company earlier this year closed all its stores and sold its assets for a mere $39 million. Now the brand seeks a fresh start: The business is rebranding itself “NewBird AI” and announced it had received a $50 million influx to buy up advanced computer chips that will let it enter the AI infrastructure business. That investment is a “drop in the bucket” for an industry spending billions to build data centers, but Wall Street loved the news. NewBird’s stock immediately rose nearly 600%.
The market’s reaction proves “AI excitement is alive and well — but as silly as ever,” Noah Weidner said at The Street. The move might make sense, though. Artificial intelligence requires a “massive volume” of computing power, and companies able to furnish it “will drum up excitement” — even if that company once sold shoes.
The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
SUBSCRIBE & SAVE
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Latest Videos From
AI is creating wealth
Allbirds’ pivot might look like a “cynical (and very possibly doomed) cash grab,” but it could be an “escape hatch” for the company, Will Gottsegen said at The Atlantic. The industry is “creating enormous wealth” and driving the stock market to record highs despite concerns about the broader world economy. Companies like Mattel, PepsiCo and Bath & Body Works “have incorporated AI into their existing products” in recent years, though with “varying levels of success.” The big question is whether the former shoe company’s “lack of experience” in AI will make it “difficult to turn a short-term stock bump into long-term success.”
“We’ve seen this movie before,” Britney Nguyen said at MarketWatch. Back in 2017 and 2018, lots of businesses “sought to hop on the blockchain bandwagon.” Long Island Iced Tea became Long Blockchain and the “stock initially soared” but was delisted in under a year. The pivot is also reminiscent of the 1990s when “companies could slap a ‘.com’ on their names and watch their stocks fly,” Emily Peck said at Axios. Allbirds’ announcement created a “surreal moment” in the AI era.
Will AI spending hold up?
The shoe company’s “flailing AI embrace” is “not a horrible idea on the surface” given that it fills a “real business need,” Nitish Pahwa said at Slate. But the AI spending that has “propped up the economy” might not persevere, and communities are “successfully obstructing the data centers” needed for further expansion. Indeed, Allbirds’ stock started to drop after the initial surge, said Bloomberg. The market roller coaster ride gives Allbirds the feel of a “meme stock,” said 50 Park Investments’ Adam Sarhan, in which “emotions take over and logic and reason get thrown out the window.”
