A sign on the facade of the Allbirds shoe company on August 25, 2025 in Walnut Creek, California.
Smith Collection | Archive Photos | Getty Images
Retailers flocked to Allbirds after the troubled shoemaker slapped the artificial intelligence label on its business, but as market history suggests, this regime rarely ends well once the initial hype wears off.
The company’s stock soared 582% on Wednesday after the company detailed shocking plans to rebrand as NewBird AI and move into computing infrastructure. The jump increased its market value by more than $100 million, up from just $21 million the day before.
Retail investors quickly embraced the new narrative, according to data from Vanda Research. Net purchases reached a record $5.2 million in one day, exceeding even the demand seen during the company’s 2021 IPO.
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Allbirds from this year to the present
This surge in speculative buying reflects a widespread return of animal spirits among small traders as the overall stock market recovers hard from losses caused by geopolitical risks. The S&P 500 completely erased losses from the Iran war and hit a new all-time high on Thursday.
“The market is not pricing risk, it is pricing a story. It is pricing the word ‘AI’ in the same way it once priced the word ‘blockchain’ and, before that, the ‘.com’ suffix,” Mark Malek, chief information officer at Sievert Financial, said in a note. “This is not analysis. This is buzzword pattern matching by investors who see AI-adjacent stocks going parabolic and don’t want to miss out on the next leg. The signals are not subtle.”
The rise of commission-free trading platforms has brought in a new generation of retail investors, lowered the cost of speculation and accelerated the spread of so-called meme trading. That dynamic was on full display during the 2021 GameStop episode, where concerted buying by individual traders sent the stock skyrocketing, inflicting heavy losses on short sellers and cementing a strategy that continues to resurface in various forms.
From karaoke to AI
Recent examples highlight how these episodes can turn into something surreal. Algorithm Holdings, a little-known karaoke equipment and niche consumer electronics maker, surprised the market by announcing its transformation to an AI-driven logistics and computing platform.
“This change in narrative was sufficient to trigger a sharp recovery in retail flows, sustaining buying beyond the initial headline and helping to drive a second rally in stock prices,” Vanda Research said in an algorithmic note.
But that enthusiasm was short-lived, as the stock has since soared and is now back at around $1, highlighting how quickly the gains from such stories can evaporate.
Allbirds’ bull market quickly showed signs of stress, with momentum fading by Thursday, with the stock down more than 20%.
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