Alibaba Drops Gaming Arm as AI Takes Center Stage

Alibaba Group Holding (BABA) is selling its gaming unit, Lingxi Games, to Asian private equity firm Trustar Capital in a transaction reportedly worth at least $1.5 billion.

The sale comes as CEO Eddie Wu makes artificial intelligence and cloud computing key strategic priorities for the company.

Why Alibaba Is Letting Go of Gaming

Lingxi CEO Zhou Bingshu told employees in a Monday memo that the handover frees Alibaba to concentrate on its strategic priorities.

“Alibaba is handing Lingxi to Trustar due to better focus on its strategic priorities,” Zhou said.

Chief executive Eddie Wu has been pruning assets outside the company’s core. Alibaba sold its controlling stake in hypermarket operator Sun Art Retail Group to DCP Capital for roughly $1.6 billion in January 2025.

Trustar Capital, an Asian buyout firm, emerged as the preferred bidder ahead of strategic buyers from the gaming industry, people familiar with the matter said. The reported price tops the roughly 9 billion yuan Alibaba was earlier expected to fetch.

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The $100 Billion AI Target Behind the Sale

In March, Alibaba outlined its goal to pass $100 billion in combined AI and cloud revenue within five years. The company has already pledged 380 billion yuan, about $53 billion, to that infrastructure over three years.

Momentum has followed. Alibaba shipped its largest model to date this month. Arena ranked Qwen3.8-Max fourth on its frontend coding leaderboard, behind two Claude Opus 5 variants and Moonshot’s Kimi K3.

That push sits inside a wider contest with US labs. Chinese AI model usage has already surpassed that of American rivals in monthly tokens processed.

Alibaba reports June quarter results on Thursday, August 20. The number that matters is whether AI-related product revenue continues to compound fast enough to justify the divestments that fund the shift.

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