Investment Review №343. The return of the bulls

With two months of geopolitical uncertainty and a busy earnings season, there is no shortage of market headlines—and some themes have slipped into the background. The late-2025 question “Is AI a bubble?” was top-of-mind for many investors, but it seems to have faded. Allbirds (BIRD) just offered a stark reminder: the company announced a pivot from eco-friendly footwear to AI infrastructure. The market reaction was immediate—BIRD shares spiked from under $3 to as high as $24 intraday, an 876% surge in a single session. Market cap jumped from roughly $21m on Tuesday to about $148m on Wednesday.

If shareholders approve the deal next month, the company plans to raise $50m, rebrand as NewBirdAI, acquire high-performance, low-latency AI compute, and lease it out on long-term contracts. However, a $50m AI infrastructure investment is negligible by comparison: CoreWeave (CRWV), a leading AI cloud provider, expects to invest up to $35bn in capacity expansion this year—700 times as much. Allbirds has neither track record, no customer base, or dedicated technology team; it does, however, have “AI” in its new name. That alone is not a strategy, and I remain highly skeptical about its long-term prospects. Recall the company’s 2021 IPO at a $4bn valuation and highly ambitious plans, followed by aggressive retail expansion, disappointing products, the closure of all U.S. branded stores in February, and the subsequent sale of intellectual property to American Exchange Group for $39m. This operational history hardly inspires confidence in a successful pivot to AI infrastructure.  

The episode echoes prior manias. In the late 1990s, companies tacked “.com” onto their names and saw double-digit percentage gains in a day. During the blockchain rebranding wave, Long Island Iced Tea became Long Blockchain Corp in December 2017 and rallied 289% in a single session. The subjects change, but the script is familiar: today’s prefix is “AI,” and in these cases investors are paying rather for the narrative than for the underlying business. 

To be clear, this is not yet a broad-based story. The AI leaders—Nvidia (NVDA), Microsoft (MSFT), Alphabet (GOOGL), Meta (META)—have real revenue, real contracts, and strong free cash flow. Still, many asked last year what a true AI bubble would look like and what signals would flag it. Allbirds’ reversal is one such signal, though more would need to appear. For context, between June 1998 and July 1999, 94 companies added “.com,” “.net,” or “Internet” to their names, and the average 10-day cumulative excess return around those announcements was about 74%. If investors observe a similar pattern now, it would be a clear red flag for broader market conditions, even if the consequences may take years to unfold. For long-term investors, episodes like this are among the simplest and clearest early warning signs of future stress.