As soon as a name change, will it take off? Behind the frenzy of AI transformation of micro-cap stocks, or is it a signal of a bubble re-emergence?

At a time when the global AI investment frenzy is sweeping through the capital markets, a speculative phenomenon known as "corporate catering" is causing high alert on Wall Street. In recent years, a large number of micro-cap companies facing delisting risks have abandoned their original core businesses, rebranded, or restructured to transform into so-called "artificial intelligence companies." Take the example of micro-pharmaceutical company Qualigen Therapeutics, which, facing the risk of being delisted from Nasdaq, within just two months shifted from promoting cancer treatment patents to changing its name to AIxCrypto Holdings (AIXC.US). Although this move initially stimulated a doubling of stock prices, this momentum was not sustained, and the stock price has since dropped by over 30% from before the transformation. This strategy of "name renewal for survival" has become a trend in small-cap stocks, even affecting former star brands. Allbirds, known for producing wool sneakers, recently renamed itself as NewBird AI and announced its transformation into an artificial intelligence developer. Although this transformation plan once drove stock prices up by six times, as the market returned to rationality, its stock price has plummeted by 63% from its historic highs. Such parabolic stock price increases have rung alarm bells on Wall Street, reminiscent of the phenomenon in the late 2021-2022 where micro-cap companies were adding "cryptocurrency" or "blockchain" to their names, as well as the rush in the late 1990s for companies to append ".com" to their names. Both of those earlier instances ended with steep drops in stock prices; recent cases are following a similar pattern: brief spikes in stock prices followed by long-term declines. Analysts believe that the transformation path of NewBird AI is reminiscent of the farce years ago when "Long Island Iced Tea" was renamed "Long Island Blockchain," which ultimately led to delisting due to the failed transformation. Historical data indicates that companies with "AI" in their names may generate short-term profit illusions but often come with significant risks of asset bubbles in the long term. Philip Petersen, Chief Investment Strategist at IG Wealth Management, pointed out that frequent rebranding in history is often a sign of extreme investment frenzy. "It's like panicking and trying to find a cure," he said. "They are trying to package themselves with the trendiest vocabulary of the moment to profit, but this usually indicates a wrong direction." Data from academic institutions and market research institutions provide strong support for these concerns. Acadian Asset Management's research shows that since 2023, 33 companies on major U.S. exchanges have aligned with the AI theme through renaming, a pattern strikingly similar to the trend in the late 1990s when companies were renaming themselves with ".com." Acadian Portfolio Manager Owen Lamont wrote in a client report, "Company renames are a signal of the artificial intelligence bubble, a pattern we saw in the late 1990s internet stocks." He referred to this as a form of "corporate catering to market sentiment." A sample analysis of 870 companies that changed their names since 2017 found that after the name change, stocks would drop by 2% in median value within a month, with an average drop of 18% one year later, and about two-thirds of the companies ultimately underperformed. This reflects that name changes are often not a refinement of business logic but rather a struggle for survival in an era of extreme industry frenzy (Peak Euphoria). Meanwhile, the frenzy in the financial derivatives market is further fueling this phenomenon. In the first three quarters of 2025, investors poured a record $8.7 billion into AI-themed ETFs, far exceeding the fundraising scale and speed seen during the peak of the cryptocurrency trend in 2021. BI data shows that in 2024, there were 18 AI-themed ETFs listed, with another 8 in 2025. In comparison, during the peak of the cryptocurrency frenzy in 2021-2022, there were only 10 and 12 cryptocurrency and blockchain-themed ETFs listed, respectively. While large tech stocks like NVIDIA Corporation and AMD have indeed realized substantial gains from data center construction and infrastructure investments, such as AMD's release of better-than-expected performance outlook this week, boosting many peers and driving a boom in data center investments, the irrational herd behavior in the micro-cap market is becoming a concentrated reflection of the market's "false fire." Investment strategy experts warn that when weak fundamental small companies collectively raise their valuations by changing "narrative terms," it often signals that the investment theme has entered an overheated stage, with significant potential risks of a sharp fallback. Mark Malek, Chief Investment Officer at Muriel Siebert & Co., stated, "The existence of NewBird AI and the fact that hasn't dropped below 40 cents is scarier than anything."