After months of decline, Alibaba (NYSE:BABA) stock suddenly soared nearly 5% from its April 7 closing price, from $119.72 to $125.32.
While this reversal may simply be part of a broader market recovery following news of growing uncertainty about the ceasefire between the US and Israel, Iran and its allies, more recent reports suggest new artificial intelligence (AI) models may have played a role as well.
Specifically, the Chinese tech giant anonymously released an AI video generation tool called HappyHorse 1.0, we reported in a late April 8 article. information. The model quickly moved up the leaderboards, generated buzz on social media, and outperformed ByteDance’s Seedance 2.0 in both image-to-video and text-to-video conversion.
Additionally, HappyHorse 1.0 could soon provide another tailwind for BABA stock, as the company’s cloud division is reportedly gearing up to make HappyHorse 1.0 available to enterprise customers.
Is Alibaba trying to fill the void left by Sora?
Elsewhere, the timing of the release appears to have been intentional or coincidental, as new AI video generation tools could help fill the void left by OpenAI’s decision to shut down Sora.
At the time of its release, Sora was expected to serve as a competitor to extremely popular social media platforms. TikTokHowever, it is done through the hosting computer and not through human-generated content.
At the same time, it garnered additional attention for its now-expired $1 billion deal with Disney (NYSE:DIS), which appears to have ultimately served primarily as a way for the House of Mouse to publicly back down on its stance on the use of intellectual property in AI content.
Still, the gains in Alibaba stock due to the release of HappyHorse 1.0 remained limited and were even partially reduced by the extended session downside correction of 0.42%. At the time of writing, it is unclear whether such performance indicates that investors are not fully pricing in releases and other potential factors.
While the AI video generation tool could help erase some of BABA stock’s 19% loss in 2026, especially given its clear advantage over competitors like Seedance 2.0, Sora’s fate may indicate it could also be a headwind.
Specifically, the official explanation regarding the termination of the service is as follows: TikTok The problem is that competitors are consuming too much of their capacity, potentially blocking other sources of revenue.
There is also speculation that the decision was part of OpenAI’s preparations for an initial public offering (IPO), suggesting that HappyHorse 1.0 could ultimately have a negative impact on Alibaba’s finances.
Featured image via Shutterstock
