Retail traders stampeded into Allbirds after the troubled shoemaker slapped an artificial intelligence label on its business, a set-up that market history suggests rarely ends well once the initial hype fades.

Shares of the company skyrocketed as much as 582% on Wednesday after the firm detailed shocking plans to rebrand as NewBird AI and shift toward compute infrastructure. The surge added more than $100 million to its market value, which had been just $21 million a day earlier.

Retail investors were quick to embrace the new narrative, data from Vanda Research showed. Net purchases hit a record $5.2 million in a single day, surpassing even demand seen during the company’s 2021 IPO.

This surge of speculative buying reflects a broader return of animal spirits among small traders as the broader stock market rebounded violently from losses triggered by geopolitical risks. The S&P 500 has entirely erased its losses associated from the Iran war and hit a fresh all-time high Thursday.

“The market is not pricing risk. It is pricing narrative. It is pricing the word ‘AI’ the same way it once priced the word ‘blockchain’ and before that the suffix ‘.com,'” Mark Malek, CIO at Siebert Financial, said in a note. “This is not analysis. This is pattern-matching on a buzzword by investors who have watched AI-adjacent stocks go parabolic and do not want to miss the next leg. The signal is not subtle.”

The rise of zero-commission trading platforms helped usher in a new generation of retail investors, lowering the cost of speculation and accelerating the spread of so-called meme trades. That dynamic was on full display during the 2021 GameStop episode, when coordinated buying by individual traders sent the stock soaring and inflicted heavy losses on short sellers, cementing a playbook that continues to resurface in different forms.

From karaoke to AI

A recent example underscores how these episodes can veer into the surreal. Algorhythm Holdings — a little-known karaoke machine and niche consumer electronics maker — stunned markets when it announced a pivot to an AI-driven logistics and compute platform.

“That shift in narrative was enough to spark a sharp pickup in retail flows, with buying persisting beyond the initial headline and helping drive a second leg higher in the stock,” Vanda Research said in a note of Algorhythm.

However, the enthusiasm proved fleeting as the shares have since round-tripped and are now back to roughly $1, underscoring how quickly such narrative-driven gains can evaporate.

The rally in Allbirds has quickly shown signs of strain, with the stock tumbling more than 20% on Thursday as momentum cooled.