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Allbirds' (BIRD) surprising pivot to artificial intelligence this past week provided yet another reminder that the AI hype is real.

On Wednesday, the sustainable sneaker company once known for making Silicon Valley's go-to shoe announced it was becoming an AI company. The stock, which hovered around $3 earlier this week, surged nearly 600% on Wednesday and closed the week above $10 per share.

How will Allbirds transform itself into an AI company? The details remain unclear, but the company said it aims to acquire high-performance AI compute hardware and lease it to customers whose demand is not met by hyperscalers or spot markets. It plans to go by the name "NewBirdAI."

Experts say the sneaker company saw an opportunity to capitalize on FOMO, or the fear of missing out. It's not the first time a company has jumped on a hot market trend to stay relevant.

This was a "Hail Mary to juice the stock," said Matt Domo, an AI advisor and founding general manager of the AWS Database Division. Allbirds used this tactic to "froth the market and peak interest," he said, because behind the AI hype is a real technology people are willing to invest in.

"Whether you call it a meme stock or not, I don't know yet," Siebert Financial chief investment officer Mark Malek told Yahoo Finance.

Many are skeptical that the company can actually make this pivot, given its lack of a clear roadmap, staff with this expertise, or adequate funding.

For the most part, Allbirds' leadership team has deep experience in apparel, not AI, except for its chief technology officer, who served as TurboTax's director of engineering nearly a decade ago.

Overhauling leadership, building data centers, and acquiring chips are extremely capital-intensive, Domo said. Whether they come out with a "magical plan" next week, "I'm pretty skeptical about that," he added.

The company plans to raise $50 million, a drop in the bucket compared to the $650 billion in capex commitments from the four Big Tech hyperscalers β€” Microsoft (MSFT), Alphabet (GOOGL, GOOG), Amazon (AMZN), and Meta (META).

Allbirds-branded shoes will continue to be available through the American Exchange Group, the company behind Ed Hardy that purchased Allbirds' footwear assets in late March for $39 million.

In the meantime, many are questioning whether this unlikely pivot signals a market bubble.

Malek said traders flocking to Allbirds shows "real problems at the fringe." He pointed to the combination of easy capital, incentives for investment bankers, and a hot AI narrative that hasn't cooled off.

But he added that when it comes to the "Magnificent Seven" stocks, the fundamentals are there.

"I still will tell you it's not a bubble at all," Malek said. "When you get this far into something, ... you're starting to see some of those features [like Allbirds' pivot.] Does that mean that it's a problem for Meta and all these other companies? No, I still think these companies are fabulous."

The Street is generally still optimistic about AI too.

Bank of America predicted that the information technology sector will drive the bulk of S&P 500 (^GSPC) earnings growth in the first quarter, "with consensus projecting earnings to rise 45% year-over-year," the firm said in a note. AI chipmakers Nvidia (NVDA) and Micron (MU) are expected to drive nearly half of the total index growth.

Wedbush analyst Dan Ives wrote in a note to clients that "tech stocks could rally another 15% from these levels into year-end."

He added, "We continue to believe the demand and supply imbalance on the hardware front around Nvidia Blackwell/Rubin [platforms] is 'overwhelming bullish' and combined with an acceleration of AI driven enterprise wide projects on the Microsoft, Google, and Amazon cloud front, [there's] a very positive framework and demand environment we are picking up in the field."

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Brooke DiPalma is a reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.

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