Shares in shoe brand Allbirds, once seen on the feet of famous people like actor Ben Affleck and former US President Barack Obama, soared on Wednesday after it announced plans to pivot from footwear to artificial intelligence (AI).

The San Francisco-based firm said it has struck a $50m (£37m) deal to become an "AI compute infrastructure" business and change its name to NewBird AI.

The announcement sent the firm's shares surging by more than 580%, though its stock market value is still more than 90% lower than when the company was first listed in 2021.

Allbirds' trainers became popular among technology workers in Silicon Valley but the company faced serious challenges in recent years.

NewBird AI will buy advanced graphic processing units (GPUs) - computer chips that power AI, Allbirds said in a statement.

The company said it had seen a "gap in the market" that has left many businesses without enough computing power because the industry cannot keep up with demand.

Its long-term plan is to offer on-demand graphics chips and cloud services that are specially built for AI, it added.

The Allbirds brand will be owned by fashion conglomerate American Exchange Group, which includes names like Ecko Unltd and Aerosoles, following a $39m deal announced in March.

Allbirds chief executive Joe Vernachio said the move will allow the Wool Runner maker to "thrive in the years ahead".

Branding consultant Wei Kan from Conduit Asia likened the move to a "liquidation" rather than a pivot, using the stock market shell of its shoe brand to move into an unrelated business.

Retail analyst Hitha Herzog said the excitement over Allbirds "just by putting AI in an announcement" makes it "clearly a meme stock".

The meme stock phenomenon gained prominence during the Covid-19 pandemic when some company's shares surged in value due to strong interest from retail investors was boosted on social media.

There is "certainly AI mania that is going on", given the lack of proof of product or earnings from the company related to its new business, Herzog said.

Allbirds was founded in 2015 by a former football player Tim Brown and a clean-technology businessman Joey Zwillinger.

The footwear firm opened dozens of shops in the US and around the world including the UK, New Zealand, China and Singapore, targeting casual joggers, office workers and yoga lovers.

But the company has struggled to turn a profit since it listed on the Nasdaq stock exchange in New York five years ago.

Its stock market value had plummeted from a high of more than $500 a share to around $2.50 just before the AI pivot was announced.

The announcement gives the NewBird AI a shell to trade on, but "a stock going from $3 to $17 on a press release doesn't restore $4bn in destroyed value," Kan said.

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