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Tech bro sneaker company Allbirds made a huge splash<\/a> yesterday when it announced<\/a> a baffling pivot to AI infrastructure \u2014 news that was met with a mix of incredulity and ridicule<\/a>.<\/p>\n The company\u2019s blindsiding metamorphosis into what it\u2019s calling \u201cNewBird AI\u201d had investors leaping from their office chairs, sending shares surging by over 700 percent on Wednesday.<\/p>\n That\u2019s despite Allbirds\u2019 core business being at death\u2019s door. In its final throes, the company sold off its intellectual property and other assets for a measly $39 million mere weeks ago, leaving its once lofty $4 billion market cap five years ago long behind.<\/p>\n But don\u2019t break out the champagne quite yet. The rally subsequently came to a \u201cscreeching halt,\u201d as Bloomberg put it<\/a>, with shares sinking a dismal 35 percent on Thursday.<\/p>\n In other words, possibly ketamine-crazed<\/a> Wall Street bros realized the morning after that a struggling shoe company may not be able to prop up a trillion-dollar industry with its promises of buying up impossible-to-get AI chips.<\/p>\n The bizarre stock market performance perfectly highlighted persistent concerns over an AI bubble, with business fundamentals taking a backseat as investors bet big on a bright and profitable future that may \u2014 or may not \u2014 still be years away.<\/p>\n Some investors were baffled why an ailing shoe brand got so much attention in the first place.<\/p>\n \u201cThis has the feel of a meme stock, where emotions take over and logic and reason get thrown out the window,\u201d 50 Park Investments chief executive Adam Sarhan told Bloomberg. \u201cThat the market actually rewarded the stock yesterday when it doesn\u2019t seem to have any kind of actual AI edge tells me that froth, specifically AI froth, is picking up.\u201d<\/p>\n \u201cBetween the risk of a huge reversal or a short squeeze, I can\u2019t see any reason why you\u2019d want to play this,\u201d Sarhan added. (A short squeeze is a rapid increase in the price of a stock primarily being driven by an excess of short sellers buying back their shares to cover their losses, not any underlying business fundamentals.)<\/p>\n \u201cThe vast majority of times, these things end in tears,\u201d he added.<\/p>\n The spike is reminiscent of other companies that have announced they were jumping on the blockchain or cryptocurrency bandwagon in past years, temporarily resulting in a major surge in interest from investors.<\/p>\n Case in point, the beverage brand Long Island Iced Tea announced<\/a> in 2017 that it was pivoting to become \u201cLong Blockchain Corp,\u201d sending its stock leaping by more than 200 percent. It didn\u2019t end well: the company\u2019s shares were delisted in early 2021<\/a>, with the Securities and Exchange Commission accusing it of never having actually pivoted to blockchain tech. (The SEC also charged three people<\/a> with insider trading in connection with the company.)<\/p>\n Allbirds may similarly be overindexing on hype alone. <\/p>\n \u201cThe market is not pricing risk,\u201d Siebert Financial CIO Mark Malek wrote in a note<\/a>. \u201cIt is pricing narrative. It is pricing the word \u2018AI\u2019 the same way it once priced the word \u2018blockchain\u2019 and before that the suffix \u2018.com.’\u201d<\/p>\n