Allbirds Shifts Focus from Sneakers to AI Infrastructure
Allbirds announced on Wednesday a significant change in its business strategy, moving from making sneakers to focusing on computing infrastructure related to artificial intelligence (AI).
The San Francisco-based company revealed it has secured a $50 million convertible loan from institutional investors to purchase graphics processing units (GPUs) for training an AI model. Additionally, Allbirds intends to rebrand as “NewBird AI” and transition towards providing cloud computing and AI services, though further details about these plans remain unspecified.
In recent months, the company has closed many of its physical retail locations due to a decline in demand, emphasizing a shift towards online partnerships. Last month, Allbirds sold its brands and footwear assets to American Exchange Group for $39 million.
The company stated, “As a result of these transactions, the Allbirds brand and legacy will continue under American Exchange Group ownership for the benefit of all our customers. Investors as of the dividend record date will receive a special dividend, and those opting to retain shares in NewBird AI will invest in our expanding AI computing infrastructure.”
NewBird AI plans to use the loan to obtain high-performance GPUs, providing dedicated AI computing power to customers. In the long run, it aims to offer GPU-as-a-Service and AI-enhanced cloud solutions, which will likely include the development of its NeoCloud platform.
Allbirds’ stock experienced a rise following the announcement, escalating from $2.49 per share to a high of $21.95 during Wednesday’s trading, but later settled around $12.30, reflecting a 27.5% decline on that day. However, it saw a staggering 379% increase over the preceding five days. Despite this surge, the stock price has plummeted by over 97% over the past five years.
The company expressed a positive outlook on the demand for AI services, noting, “The increasing development and adoption of AI is generating a significant structural demand for specialized high-performance computing that the market is currently struggling to meet.” They highlighted that the procurement lead times for high-end GPUs are on the rise, and data center vacancy rates in North America are at historic lows, leading to a situation where numerous enterprises, AI developers, and research organizations face challenges in securing the computing resources essential for scaling AI operations.
NewBird AI aims to bridge this gap by acquiring low-latency AI computing hardware, planning to offer access through long-term leases to meet the needs of consumers that current markets cannot adequately address.
