Key Points
- Allbirds has sold its shoe business and it now vying to compete in the GPU as a service market, rebranding to NewBird AI.
- The company signed a $50 million funding deal, but the specifics of this arrangement are not particularly flattering.
- While shares have skyrocketed, NewBird's strategy comes with more questions than answers.
- Special Report: Altucher: This is My Favorite FREE Starlink Pre-IPO Ticker
Once a trendy shoe brand among tech-oriented consumers, Allbirds (NASDAQ: BIRD) is undertaking a huge shift in its business model. The company has sold its shoe product portfolio and is now moving into the market’s most discussed area: artificial intelligence (AI) infrastructure.
Allbird’s AI pivot has caused its share price to skyrocket, surging by more than 580% on April 15. However, aside from parabolic gains and a move into the flashy AI investment theme, what is Allbird’s actual plan going forward? Here’s where the company has been, and what is known about its new strategy going forward.
As Sales Tank, Allbirds Exits the Shoe Business
When Allbirds went public back in 2021, it was a relatively successful shoe company. That year, sales topped $275 million; the firm was not massively far off from being profitable, and it had a market capitalization of nearly $4 billion. Sales continued to rise to almost $300 million in 2022, but losses began to mount. The company’s operating loss approximately tripled from around $33 million to $96 million from 2021 to 2022.
Following 2022, revenue took a turn for the worse. Sales fell by 15% in 2023, and would drop by 20% or more in each of the following two years. Clearly, the popularity that Allbirds' shoes had once garnered was fading quickly. By the end of March 2026, Allbirds' market capitalization had fallen to just $23 million, a staggering 98% drawdown from its highs.
At the end of March, Allbirds made the decision to sell “substantially all” of its assets and intellectual property to American Exchange Group for $39 million.
In short, Allbirds is getting out of the shoe business. Around two weeks later, the company announced it had agreed to sell up to $50 million worth of convertible debt to an unnamed institutional investor. This funding allows the company, now known as NewBird AI, to pursue its AI strategy.
NewBird AI: The Latest Addition to the “GPU as a Service” Market
NewBird AI intends to use the funding from this investor to purchase NVIDIA (NASDAQ: NVDA) graphics processing units (GPUs). This will allow them to operate a GPU-as-a-service business, which involves renting GPUs to customers looking to execute AI workloads. This is essentially the same business model that Microsoft (NASDAQ: MSFT) and many other hyperscalers operate within their cloud businesses. Companies like CoreWeave (NASDAQ: CRWV) do the same, with NewBird calling itself a "neo-cloud," as CoreWeave is often described.
Still, it is important to note that NewBird has not yet received the $50 million, or anywhere close to it. At this point, the company has received $3.25 million, using it to buy NVIDIA Blackwell GPUs. It is leasing these GPUs to a customer in a $2.75 million three-year deal. It's unclear whether all of the $3.25 million worth of GPUs is going to this customer. If it were, NewBird may already be losing money on the deal. NewBird also has to pay 12% annual interest on the convertible debt, a meaningful profitability headwind.
The company will receive an additional $2 million, pending a May 18 shareholder meeting, at which a vote will also be held to approve the shoe sale. Importantly, the remaining $44.75 million remains fully at the option of the institutional investor to provide or not. This indicates that the investor wants to see how NewBird’s initial GPU deployments play out before committing more capital. It is far from a ringing endorsement of NewBird’s prospects, signaling a cautious approach.
NewBird’s AI Strategy Raises Significant Questions
NewBird notes, “North American data center vacancy rates have reached historic lows, and market-wide compute capacity coming online through mid-2026 is already fully committed. The result is a market where enterprises, AI developers, and research organizations are unable to secure the compute resources they need to build, train and run AI at scale. NewBird AI is being built to help close that gap.”
Essentially, the firm is saying that data centers are out of capacity, leaving small AI developers with no compute to train or run their models. These smaller players are presumably NewBird’s target customers.
However, to serve them, NewBird needs GPUs. This clashes with the idea that larger AI computing providers lack capacity. If these players can’t get their hands on enough GPUs, then why would the tiny NewBird be able to? It's possible that the company is looking to buy stranded GPU assets. This could include purchasing them from past crypto miners that have shut down. It will be interesting to see what further details the company provides around its strategy going forward.
Overall, it's too early to assess NewBird’s outlook. In the meantime, engaging with this small name, rife with uncertainty, is a risky proposition. Notably, the day after NewBird’s surge, the stock tanked 36%.
Read this article online ›
The best investment opportunities don't wait. Get our research and stock ideas delivered straight to your smartphone—so you never miss a market-moving opportunity. Our text alerts ensure you see timely stock ideas and professional research reports instantly, whether you're in a meeting, commuting, or away from your desk.
Get Text Alerts from American Market News (free)
