Stock alpha is excess risk of the required return means it is determined by deducting the required return of stock according to security market line from the expected return of the stock.
If an investor is buying stocks with positive alpha then the Sharpe ratio of the portfolio will also increase. In this case the expected return will be higher than the required return. And the performance of the portfolio is much higher than the set standards. The price of the stock whose alpha is positive will be very low because of the high risk.
If the investor is buying the stock after a detailed research knowing that the stock price is too low due to some mispricing or misleading information then the price of the stock will increase at a later point of time.
If all the investors have the same expectation about the stock then they purchase the stock. So, the stock price will increase in which turn will change the expected return of the stock.
Generally, the expected return of a positive alpha stock will decrease until the stocks are in the security market line and the market portfolio is efficient.