You know how the saying goes: If at first you don’t succeed, stick “AI” at the end of your company name and see what happens.

At least that’s the playbook Allbirds is using. Today, the merino-wool shoemaker that took Silicon Valley millennials by storm is ditching its tech bro customers and pivoting to actual tech itself, turning into a “fully integrated GPU-as-a-Service and AI-native cloud solutions provider,” the company declared. The impressive use of buzzwords comes with a fun new name, too: NewBird AI. Hey, why not?

The perplexing announcement may seem like a desperate attempt to pander to the trend du jour, but it was still enough to woo the retail crowd: Shares jumped an eye-popping 582.33% today.

Zoom out: Today’s news capped off a steep fall from grace for Allbirds. The company clinched a $4 billion valuation during its first day of trading in 2021, but Allbirds grew too fast, and its trendy sneakers weren’t selling enough to make the company as profitable as investors hoped. Shares plummeted 99.6% between November 2021 and late last week.

That’s why Allbirds sold its shoe business for $39 million to retail conglomerate American Exchange Group back in March (which will keep selling the shoes, btw). Allbirds was left a publicly traded shell of its former self, which is now being stuffed with a $50 million convertible financing facility from an unidentified institutional investor to fund the new GPU venture.

Old bird, NewBird

Allbirds is the latest member of the club of companies that once had an actual business, but ditched it for a flashy new trend after things started to go south.

Remember Long Island Iced Tea? They rebranded to “Long Blockchain” (doesn’t really have the same ring to it) back in 2017. While the stock popped after the announcement, it was delisted a year later. More recently, a little-known karaoke company called Algorhythm Holdings sent logistics stocks spiraling after announcing it was pivoting into an AI platform for trucking companies.

Meanwhile, some companies are tapping into AI demand as a cash generator to support their real business. Just look at Boom Supersonic, which is building high-speed airplanes—but as a side hustle, sells its gas turbines to AI companies that need more data center power.

It’s too early to tell which type of company Allbirds will turn out to be—and if you’re wondering WTF is Allbirds going to do in the world of “high-performance GPU assets,” you’re not the only one. But the hype is emblematic of how much blind enthusiasm there is in the market about all things AI, and how retail traders have become a force for Wall Street to reckon with.—LB

🟢 What’s up

• Bank of America rose 1.82% as earnings per share hit their highest level in nearly two decades.
• Morgan Stanley gained 4.52% after beating estimates, with trading revenue coming in nearly $1 billion above expectations.
• Blue Owl Capital climbed 8.18% as PIMCO bought $400 million of bonds tied to its private credit fund.
• Snap jumped 7.86% on plans to cut roughly 16% of its workforce.
• Nike ticked up 2.81% after CEO Elliott Hill and Apple CEO Tim Cook each purchased $1 million in shares.
• GitLab rose 8.37% on news of an expanded partnership with Google Cloud.
• Uber rallied 5.99% after announcing plans to invest over $10 billion into autonomous vehicles.
• Quantum computing stocks soared for no particular reason: Xanadu Quantum skyrocketed 69.79%, D-Wave Quantum gained 22.63%, and IonQ jumped 20.95%.

What’s down

• Hermès tumbled 7.59% and Kering dropped 4.7% as Middle East tensions weighed on luxury goods’ sales growth.
• Solaredge Technologies fell 11.98% and Sunrun slid 2.81% amid reports China may restrict exports of advanced solar equipment to the US.
• ASML declined 2.41% as tightening export controls weighed on its China business, reducing its share of net system sales.
• Caterpillar fell 3.04% after acquiring autonomous electric tractor startup Monarch Tractor.
• BRP, which makes jetskis and ATVs, plunged 35.08% after it suspended its fiscal 2027 financial guidance.

Buckle up: Day trading just lost its airbags and is in for a wild ride.

The Securities and Exchange Commission approved a rule change by FINRA to ditch a long-standing requirement that “pattern day traders”—traders who make four or more trades within five days—maintain a minimum balance of $25,000 in their margin accounts. The rule was designed to protect rookies and retail traders from going full-throttle into bad bets, forcing them to add some financial padding to their accounts in case of a crash landing.

This change is just the latest sign of Wall Street loosening the reins right as investors seem eager to stress-test how much risk they’re willing to stomach. It’s also a windfall for brokerages serving retail traders, since more users will now be free to rack up more trades (and more fees along the way).

Robinhood rose by 10.41% today—a welcome rebound given shares have plunged 22% this year thanks largely to freefalling cryptocurrencies. Meanwhile, online trading platform Webull rose 11.17%, with CEO Anthony Denier calling this SEC ruling an “evolution in how active traders can participate in the markets.”

Still, it won’t be a complete free-for-all. For one, margins and risk will be assessed in real time rather than just at the end of day, so trades can be blocked or users will have to pony up more cash if their account can’t cover the difference. But day traders are taking it as a win, happy to step into the big leagues even if their bankroll’s on the smaller side.—JD

Funny how quickly things change: Just this week, we were talking about how memory stocks were rallying—today, the sector’s pulling back.

Software, on the other hand, is starting to make a comeback after months of getting steamrolled. The iShares Expanded Tech-Software Sector ETF is down 22.43% YTD, but bounced back 4.42% today, while Adobe jumped 3.79%, ServiceNow climbed 7.29%, and Workday ticked up 5.31%. And Oracle has had a fantastic week, gaining 18.2% over the last five days.

A buying opportunity

Analysts now say the recent AI panic is getting ahead of itself: Fears that tools like Anthropic’s Claude will disrupt the entire software industry look overblown, and the selloff has created a potential entry point for investors as valuations suddenly look attractive. Salesforce is trading at under 13x earnings, far below its 10-year average of 45x, while Adobe is below 10x, down from roughly 30x—both hovering near historic lows, according to Bloomberg.

Meanwhile, Bloomberg Intelligence is forecasting 16.5% profit growth in 2027 for software and services companies, up from 15.7% just a few months ago. Cheaper stocks and rising earnings is a winning combination.

One size doesn’t fit all

Sure, some stocks may be underperforming or exposed to AI disruption, but the problem is that all software names are being unfairly grouped into the same narrative, even as their underlying businesses remain strong. A prime example of this is Microsoft.

Shares of the Office 365 behemoth are down 14.97% YTD, and analysts argue that may present an attractive opportunity for investors. Bernstein notes that Microsoft’s muted Azure growth is justified, as a large allocation of capex is being directed toward AI models and first-party apps, with revenue growth expected in the next two quarters. Piper Sandler echoes that view, calling Microsoft one of the most defensible names given its ability to monetize the AI boom through Azure demand.

Bottom line: Markets are fickle, and stocks can swing with every headline—but if fundamentals are any indication, software’s recent selloff looks more like a reset than a collapse, with the strongest players still positioned to come out ahead.—SY

• The billionaires are fighting again: Elon Musk and Jeff Bezos are duking it out in space.
• For those who apparently have a vendetta against using menus, Starbucks just launched a beta app in ChatGPT to help customers “find a drink that fits.”
• 5 million children now have Trump Accounts, and 1.2 million are eligible for the $1,000 pilot program.
• North Korea is suspected to have orchestrated the largest cryptocurrency heist of the year so far.
• CoreWeave struck a $6 billion deal with Jane Street, the elusive quant trading firm.
• Major indexes are officially reaching overbought territory. Here’s why that’s an ominous sign.

Economic reports: We’ve got the usual weekly jobless claims report, the Philadelphia Fed manufacturing survey, and the industrial production/capacity utilization report. We’ll also hear from New York Fed President John Williams and Fed governor Stephen Miran.

Earnings announcements: We’re almost done with bank earnings, and the market’s attention is slowly shifting elsewhere, with numbers from TSMC, Netflix, PepsiCo, Abbott Laboratories, Charles Schwab, and Bank of New York Mellon.

Everything else: The NHL regular season wraps up tomorrow, and everyone’s rooting for the Buffalo Sabres’ feel good story to continue, right? Right???