OpenAI Just Pulled the Plug on Sora. Is This AI Stock the Biggest Winner?

When the public first got a glimpse of Sora, OpenAI's text-to-video generative AI model, some saw the disruptive potential immediately.

Tyler Perry, the blockbuster Hollywood director, said he was pausing an $800 million expansion on his studios in Atlanta. Perry told The Hollywood Reporter back in February 2024, "All of that is currently and indefinitely on hold because of Sora and what I'm seeing. I had gotten word over the last year or so that this was coming, but I had no idea until I saw recently the demonstrations of what it's able to do. It's shocking to me." Perry predicted that Sora, which could generate high-quality cinematic video, would touch every corner of the industry.

Instead, two years after that auspicious beginning, OpenAI is retiring Sora, sending it to the dustbin of once-promising tech products that weren't meant to be.

Image source: Getty Images.

Why OpenAI is killing Sora

In a brief post on X last week, OpenAI said it was "saying goodbye to the Sora app," acknowledging to creators, "We know this news is disappointing." Though OpenAI didn't explain the decision, the move seemed to be largely motivated by cutting costs and reallocating spending to areas that are more likely to generate a return on investment.

While Sora was clearly a powerful technology, it struggled to find product-market fit. App downloads spiked shortly after its official launch in October 2025, but its user count faded rapidly from there, indicating a faddish response to the app. Internet users already seem to have gotten jaded with so-called AI slop, or short AI-generated videos with no real purpose, and the technology never really found a business use case.

Hollywood largely rejected it, despite its partnership with Disney, fearful that such technology could eliminate thousands of jobs, steal intellectual property, and even imitate celebrity likenesses. While Sora had potential in advertising, ad execs told AdWeek that they'd moved on to AI tools that better fit the way they work.

Sora was also expensive for OpenAI, reportedly costing $15 million a day to run, while it only brought in $2.1 million in total revenue in its history.

What it means for OpenAI

Cost rationalization is typically a necessary step for a rapidly growing start-up, but pulling the plug on Sora still looks like a setback for the generative AI leader, at least on some levels.

Sora had disruptive potential, and it wowed users, but the decision to kill it also reflects the dogfight OpenAI now finds itself in against both Anthropic and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), the other large language model leaders.

Anthropic seems to have won the enterprise software mantle for now, with new disruptive plug-ins from Claude Code and Claude Cowork, and some observers now consider Google's Gemini to be a superior model to ChatGPT. Late last year, OpenAI CEO Sam Altman even declared a "code red" in response to Google's advances with Gemini.

Overall, the end of Sora is one of several signs that OpenAI may be struggling. It gave an opening to Anthropic a month ago, making Claude the #1 downloaded app when OpenAI partnered with the Pentagon ahead of the Iran war after Anthropic rejected its terms. OpenAI also guaranteed a 17.5% minimum return on preferred equity to fund a new joint venture, which seems like a steep price, and could indicate that investors are starting to balk at OpenAI's losses and need a higher return to invest.

Why Alphabet looks like the winner here

The end of Sora is good news for a number of would-be competitors, including Hollywood, but Alphabet looks like the biggest winner here.

OpenAI's mounting losses show why Alphabet has an advantage over start-ups in the AI race. Its advertising machine drove more than $100 billion in total profit at the company last year, and it can deploy as much of that as it needs to into AI ventures like Gemini. Alphabet is currently spending aggressively on new AI infrastructure to support Gemini, Google Cloud, and other ventures like Waymo, forecasting capital expenditures of $175 billion-$185 billion.

Sora also seemed like a would-be competitor for YouTube, and a YouTube-like platform for AI-generated video would have been one of the more obvious ways to monetize Sora. Now, that is no longer a threat, and if Alphabet decides to make its own Sora-like app in the future, it won't have to contend with OpenAI.

Finally, Alphabet is an investor in Anthropic, which seems to have closed the gap significantly with OpenAI in recent months, and the Sora decision offers more evidence that OpenAI is facing a cash crunch as the company is expected to burn more than $17 billion in cash this year, benefiting Anthropic as well.

Overall, Alphabet has made tremendous strides since the days of its Bard chatbot flop shortly after ChatGPT launched, and the market has rewarded it. Any further challenges at OpenAI should only provide a tailwind to Alphabet in AI and boost its chances for success.

Jeremy Bowman has positions in Walt Disney. The Motley Fool has positions in and recommends Alphabet and Walt Disney. The Motley Fool has a disclosure policy.