A sustainable shoe company that once attracted tech executives and Hollywood celebrities is making a surprising transformation into the artificial intelligence sector.
Allbirds announced Wednesday it has secured a binding agreement with an undisclosed institutional investor for $50 million to completely transform its operations toward AI infrastructure services. The San Francisco company will adopt the name NewBird AI and plans to invest the funding in graphics processing units (GPUs). The deal is anticipated to finalize in the second quarter of this year.
“The rise of AI development and adoption has created unprecedented structural demand for specialized, high-performance compute that the market is struggling to meet,” the company said in the release. “NewBird AI is being built to help close that gap.”
The radical business transformation has left industry experts questioning the strategy.
“On the surface, it’s a strange pivot,” said AI infrastructure expert Bill Kleyman. “I’ve been in this industry a while, and a company like Allbirds moving from shoes into AI infrastructure is not a very natural adjacency.”
The company’s plan to become a “GPU-as-a-service” operation that leases computational resources to AI firms remains vague. This business model involves providing access to massive quantities of graphics processors and specialized AI chips from manufacturers like Nvidia or AMD, typically housed in large data centers operated by cloud computing leaders such as Amazon or Oracle.
Managing physical AI infrastructure “requires access to GPUs in a constrained market, long-term power agreements, advanced cooling strategies, and a credible operating model,” explained Kleyman, who serves as CEO and co-founder of Apolo.us.
This announcement follows Allbirds’ sale of its intellectual property and select assets to American Exchange Group for $39 million more than two weeks ago. American Exchange Group specializes in accessories design, licensing and manufacturing, owning retail brands including Aerosoles, White Mountain, Jonathan Adler and Ed Hardy.
The current situation represents a steep decline from Allbirds’ $4 billion valuation peak in late 2021. The company previously announced it would skip its scheduled March 31 quarterly earnings report.
This development represents a complete reversal from the company’s 2015 founding by former soccer professional Tim Brown and renewable resources specialist Joey Zwillinger. Their original goal focused on manufacturing footwear using natural materials instead of synthetic alternatives. The company introduced its signature wool runner shoe in 2016. However, the brand expanded too aggressively, similar to other online companies that opened brick-and-mortar locations, while consumer enthusiasm waned.
In February, the brand closed most remaining physical locations to concentrate on online sales, retail partnerships and international distribution. Currently, it maintains two outlet locations in the United States and two regular stores in London.
Allbirds stock jumped over 600% following Wednesday’s announcement, trading near $18 in late afternoon sessions. The stock was valued at $3 just days earlier and previously reached $520 per share.
Kleyman characterized the stock surge as “more like initial excitement and speculative momentum tied to anything AI rather than validation of execution.”
Kleyman also observed that $50 million represents modest funding for entering an infrastructure-intensive market and noted the widespread desire among companies to associate with AI.
“Some of those shifts are real and strategic,” he said. “Others feel more reactive. In this case, I think it’s fair to say it can come across as a bit desperate. The underlying business struggled, and AI presents a compelling narrative reset.”
