After months of declining, Alibaba (NYSE: BABA) stock suddenly soared nearly 5% from the April 7 close at $119.72 to $125.32.
While this reversal might simply be part of a market-wide recovery on the news of an increasingly uncertain ceasefire between the U.S. and Israel and Iran and its allies, more recent reports hint that a new artificial intelligence (AI) model might have played a part as well.
Specifically, the Chinese technology giant has anonymously released an AI video generation tool called HappyHorse 1.0, per a late April 8 article from The Information. The model rapidly rose in the leaderboards and generated social media buzz, overtaking ByteDance’s Seedance 2.0 in terms of both image-to-video and text-to-video.
Furthermore, HappyHorse 1.0 could soon provide further tailwinds to BABA stock as the company’s cloud division is reportedly preparing to make it available to enterprise clients.
Is Alibaba about to fill the vacuum left by Sora?
Elsewhere, the timing of the release appears to have been either deliberate or fortuitous, as the new AI video generation tool could help fill the vacuum left by OpenAI’s decision to shut down Sora.
Upon release, Sora was expected to serve as a competitor to the highly popular social media platform TikTok, though through hosting computer rather than human-generated content.
Simultaneously, it drew additional attention due to the now-defunct $1 billion agreement with Disney (NYSE: DIS) that has apparently ended up serving primarily as a way for ‘The House of Mouse’ to officially mark down its stance on the use of intellectual property in AI content.
Why the new AI video tool might not help Alibaba stock reverse 2026 losses
Still, Alibaba stock gains from the release of HappyHorse 1.0 remain limited and have even partially diminished with a 0.42% extended session downward correction. At press time, it is unclear if such performance is indicative of investors not fully pricing in the release or other potential factors.
Elsewhere, while the AI video generation tool could, especially given its apparent advantage over competitors like Seedance 2.0, help erase some of BABA shares’ 19% 2026 losses, the fate of Sora might indicate it could also serve as a headwind.
Specifically, the official explanation for the termination of the TikTok competitor is that it was consuming too much of the company’s capacity, potentially blocking other revenue streams.
It has also been speculated that the decision was part of OpenAI’s preparations to conduct an initial public offering (IPO), hinting that HappyHorse 1.0 might also end up having an adverse impact on Alibaba’s financials.
Featured image via Shutterstock
