Shoe Seller Allbirds Runs Headlong Into a Crowded AI Space

“I know who I WAS when I got up this morning, but I think I must have been changed several times since then.” ― Lewis Carroll, Alice’s Adventures in Wonderland

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In a move straight out of the dot-com bubble playbook, companies that aren’t in AI are rebranding themselves to AI in hopes of surviving this age of AI, while companies that started the AI mania have no idea how to make money from AI.

Allbirds, a shoe seller, said Wednesday via a press release that it’ll transform itself into an AI compute infrastructure company. To those saying that surely investors are seeing the silliness of the pivot, I hate to break it to you, but they’re not. Shares of Allbirds, soon to be NewBird AI, finished up over 580% yesterday. 

The press release also said the company will buy GPUs and then deploy them to those who need the compute. Purchase of the GPUs will be financed by the company’s agreement for a $50 million convertible financing facility with an institutional investor. It hopes to eventually “become a fully integrated GPU-as-a-Service (GPUaaS) and AI-native cloud solutions provider.” 

The deal with the facility is supposed to close the second quarter of 2026. 

Of course, we’ve seen this film before. Long Island Iced Tea became Long Blockchain in 2017, which later delisted and got investigated for fraud and insider trading. There’s also Riot Platforms. It became a bitcoin miner and did well for a bit until the tide turned. The most successful pivot, however, likely comes from textile company Berkshire Hathaway going into insurance. 

The thing is that the recent developments at OpenAI are making me realize that while the hype about AI is real, the money isn’t—at least for now. 

OpenAI’s expected to go public this year, exposing its previously unknown weaknesses. Currently, it’s commanding over $800 billion in valuation—the second highest value for a private company after SpaceX’s $1.25 trillion—which is a mind boggling number for a business model that couldn’t possibly be any more unclear. At first, it was focused on ChatGPT and securing computing power, but then it expanded into other areas like video creation and is now repositioning itself to the enterprise market. 

Chief Executive Sam Altman knows all too well OpenAI needs a focus, so he issued a code red last year. But not too long after that, OpenAI bought a tech talk show TBPN for “low hundreds of millions of dollars,” according to reporting by the Financial Times, and no one is quite sure why. I guess the adage “do as I say, not as I do” came true. 

If OpenAI’s latest pivot is successful, it’ll make Anthropic a much more formidable rival because its chatbot Claude has done a much better job of infiltrating the enterprise market and earning paid subscriptions. Anthropic is also supposed to go public this year and ranks as the fourth most expensive privately owned company at $380 billion.

However, neither OpenAI nor Anthropic have a strategy for recouping the billions they’ve already spent on training AI models. That’s a big reason why they both need to go public, so they have access to a fresh pool of capital.

Meanwhile, xAI, a laggard in this race, is also trying to reinvent itself. Elon Musk said that it “was not built right first time around, so is being rebuilt from the foundations up.” The company’s job postings, looking to hire everything from macro research analysts to physics tutors to writing specialists, have increased in recent days, signaling its quest to become an everything app. (Building a Chinese-style everything app has long been one of Musk’s explicit ambitions.)

It’s been more than three years since AI went mainstream, yet we’re still waiting to see how money is made from it.

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📧✍️Here’s what a reader commented📧✍️

Q: Did you buy based off of TACO this year? 

A: I was never good at timing the market and being able to sift through what was real news and what was just noise. This is why I signed up and paid for Tom Lee’s advice and Mark’s analysis. I am mostly a buy and hold investor, not a trader so I suppose I did not make the money other smarter TACO traders did as you suggested in this article. That said, my portfolio is higher than what it was when I started the year so I am happy. 

Catch up with Fundstrat Direct

We detail the 4 reasons retail investors missed the low and likely are sidelined even as the S&P 500 reached an all-time high in just 11 days. These are arguments we have highlighted for the past few weeks, but we put this all in one place. In the meantime, we continue to favor crypto ethereum, bitcoin, Mag 7 and software, followed by our other recs.

Technical

My technical take is that the first important move off the lows for US Equities is nearing completion, and now consolidation likely should be seen as a dip-buying opportunity over the next 3-4 weeks.

Crypto

Strategy likely deployed significant capital into BTC today via STRC issuance. Volumes reached ~$1.5B, the highest on record, implying roughly $1.1–1.3B of incremental demand. Despite this, BTC finished lower on the day, retracing from an early move higher and trading back toward ~$74k. The inability to hold gains in the face of this magnitude of flows suggests meaningful supply above ~$75k–$76k.

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