Allbirds, the footwear company once popular enough to be called the ‘Silicon Valley uniform’, has declared a transition into an artificial intelligence (AI) company. The market is casting a skeptical eye, asking whether a firm that lost ground in its existing business is merely jumping on the AI bandwagon.

Allbirds, headquartered in San Francisco, said on the 15th (local time), “We are shifting our business to AI computing infrastructure,” adding, “Over the long term, we will reinvent ourselves as a provider of graphics processing unit (GPU) subscription services (GPUaaS) and AI-native cloud solutions.” It plans to change its corporate name to ‘Newbird AI’.

The announcement came after Allbirds agreed last month to sell the Allbirds brand and footwear-related assets to fashion accessories company American Exchange. Allbirds is also pursuing the deletion of a charter provision stating that the company should be operated for the public interest of environmental conservation.

Allbirds drew attention in 2016 with its first product, the eco-friendly wool sneakers ‘Wool Runner’. Emphasizing sustainability and comfort, it captivated Silicon Valley information technology (IT) workers. It attracted investment from figures including Hollywood actor Leonardo DiCaprio.

However, a key flaw was its failure to address durability. Many complained that the shoes became hard to wear after just a year. Although it opened stores worldwide, including in South Korea, and expanded into apparel and running shoes, it failed to break out beyond a limited customer base. According to The New York Times, Allbirds now has only two outlet stores in the United States.

In the end, AI is what Allbirds chose after stepping away from the footwear business. The company said an institutional investor agreed to invest $50 million (about 73.6 billion KRW) and that it would use the funds to purchase GPUs. Dillon Carden, an analyst at investment bank William Blair, said, “A $50 million investment is a mere drop in the bucket,” adding, “By any measure, this is a last-ditch gamble.”

That day, Allbirds shares closed up 582% at $16.99. Matt Maley, chief market strategist at brokerage Miller Tabak, told Bloomberg News, “Such moves are a sign that there is froth in the market,” saying investors should exercise caution.

Allbirds is not the only company seeking a second act by hopping on the AI boom. The U.S. karaoke-machine maker Singing Machine changed its name to ‘Algorithm Holdings’ in 2024 and announced in February that it had developed AI technology to improve trucking efficiency. Back in 2017, when cryptocurrencies were in the spotlight, a beverage company called Long Island Iced Tea changed its name to ‘Long Blockchain’, sending its share price soaring. But the business pivots were not successful.