A Shoe Company Is Now an AI Company? What That Means for Investors

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When a Story Becomes More Important Than the Business

Markets tend to reward innovation. New technologies can reshape industries, create entirely new businesses, and generate significant wealth over time.

But there is an important distinction investors sometimes overlook: a transformative technology does not automatically make every company connected to it a good investment.

That distinction became especially clear recently when footwear company Allbirds announced plans to pivot toward artificial intelligence. Shortly after the announcement, the stock surged dramatically — despite little evidence of a defined AI business model or operating strategy.

On the surface, the situation may seem unusual. In reality, it reflects a pattern that has appeared repeatedly throughout market history.

The Pattern Is Older Than AI

Periods of technological excitement often create a powerful narrative in the markets. Investors begin focusing less on what a company currently does and more on what it might someday become.

Once that shift happens, struggling companies sometimes attempt to attach themselves to the dominant trend.

The internet boom of the late 1990s produced many examples. Companies added ‘.com’ to their names and saw stock prices surge despite having weak business fundamentals or unclear paths to profitability.

The crypto boom created similar behavior. One widely discussed example involved a beverage company that renamed itself around blockchain technology and experienced a sharp stock increase almost immediately, despite having little connection to the underlying technology itself.

Even further back, the South Sea Bubble in the early 1700s followed a remarkably similar pattern. Excitement around overseas trade led to speculative investing, copycat businesses, and soaring valuations disconnected from economic reality.

The technology changes. Investor behavior often does not.

Why This Keeps Happening

One of the more interesting aspects of speculative cycles is that the underlying technology is often legitimate.

The internet did change the world. Artificial intelligence likely will as well. Blockchain technology introduced real innovation.

The issue is not whether the technology matters. The issue is whether stock prices begin reflecting unrealistic expectations long before businesses prove they can deliver meaningful profits.

A feedback loop often develops:

• A compelling story captures investor attention.
• Investors buy into companies connected to the story.
• Rising stock prices reinforce belief in the narrative.
• More investors rush in because prices continue climbing.

At some point, the stock movement itself becomes the justification for the investment.

That is usually where fundamentals begin to matter less — at least temporarily.

Fundamentals Still Matter

Eventually, markets tend to refocus on basic business realities:

• Does the company generate meaningful revenue?
• Is the business profitable?
• Does it produce sustainable cash flow?
• Is the valuation reasonable relative to what the company actually earns?

Those questions can temporarily disappear during periods of excitement, but they rarely disappear permanently.

History shows that many companies tied to speculative themes eventually struggle once enthusiasm fades. Meanwhile, some of the long-term winners are often businesses with strong fundamentals that adapt thoughtfully over time rather than chasing headlines.

That distinction matters because being correct about a technology trend does not necessarily mean being correct about an individual investment.

What Investors Can Take Away From This

Speculative periods can create pressure to chase what appears to be working in the moment. Rapid price increases naturally attract attention and emotion.

But thoughtful investing usually requires separating the excitement surrounding a theme from the underlying economics of the business itself.

That does not mean avoiding innovation altogether. It simply means remaining grounded in questions the market sometimes stops asking during speculative periods:

• What does this company actually do?
• What is being paid for future expectations?
• How much optimism is already reflected in the price?
• Does the valuation still make sense if growth slows?

Those questions may feel less exciting during strong market runs, but over longer periods they often become far more important.

Final Thoughts

The recent Allbirds story is less about one company and more about investor psychology during periods of market enthusiasm.

Speculative cycles are not new, and they rarely look obvious while they are happening. That is part of what makes them difficult to navigate.

For long-term investors, staying anchored to fundamentals, valuation, and broader financial goals may matter more than trying to predict exactly when enthusiasm will peak.

If this is something being thought through more carefully, or if questions around investments and long-term positioning have started to feel more complex, a second perspective may be worthwhile.

Authors:

Ryan Wyatt, CFP®, CIMA®

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