Allbirds, which was once favoured by the likes of Barack Obama and Ben Affleck, has struck a $50 million (c. £37m) deal to transform itself into an “AI compute infrastructure” business, rebranding as NewBird AI in the process.

Under its new guise, the firm plans to purchase advanced graphics processing units (GPUs) – the computer chips that underpin AI systems – and eventually offer on-demand cloud computing services tailored specifically for AI workloads. Allbirds said it had identified a “gap in the market”, with demand for computing power outstripping what the industry is currently able to supply, BBC reports.

The Allbirds brand itself will not disappear entirely. Fashion conglomerate American Exchange Group, home to labels such as Ecko Unltd and Aerosoles, agreed in March to acquire it for $39m (c. £29m). Chief executive Joe Vernachio said the arrangement would allow the maker of the beloved Wool Runner trainer to “thrive in the years ahead”.

Despite the dramatic share price reaction, the context is sobering. The company’s stock market value remains more than 90% below its 2021 listing price, having collapsed from a high of over $500 (c. £370) per share to roughly $2.50 (c. £1.85) before the announcement. Founded in 2015 by former footballer Tim Brown and clean-technology entrepreneur Joey Zwillinger, Allbirds expanded ambitiously, opening shops across the US, UK, New Zealand, China and Singapore, but never managed to turn a profit since listing on the Nasdaq.

Not everyone is convinced by the transformation. Branding consultant Wei Kan of Conduit Asia described the move as more of a “liquidation” than a genuine pivot, using the existing stock market shell to enter an entirely unrelated sector.

He said: “A stock going from $3 to $17 on a press release doesn’t restore $4bn in destroyed value.”