A shoe company sold its entire footwear business for $39 million, rebranded as an AI compute infrastructure firm, and watched its stock surge 582% in a single day. Allbirds, now NewBird AI, was once a $4 billion shoe company and is the latest company to discover that slapping "AI" in the company name is the fastest way to move a stock price in 2026. CNN drew the comparison to Long Island Iced Tea Corp., which rebranded as "Long Blockchain" during the 2017 crypto craze. That story ended with SEC insider trading charges and delisting. While AI is still very early in its journey, the deep obsession across corporations and investors, along with AI-native companies that elicit eye-watering valuations does begin to raise the question, “Is this a bubble waiting to burst?”

A quick note: this week's Intelligence Report is a departure from the usual government-and-AI focus, though I think it’s an important one that’s on the minds of many people following the AI story.

On Tuesday, we covered the complications with the AI data center buildout race: massive energy demands, community outrage, and a 34 GW gap between what the industry needs and what the grid can deliver. Those stories raise a bigger set of questions that I think are worth pulling on. Nearly $700 billion is being spent on AI infrastructure this year. Trillions more are projected over the next five years.

What is all of it for? Will it pay off? Is this the foundation of the next economic transformation, or are we watching a speculative cycle that's gotten ahead of itself?

What’s Inside:

Let's get into it.