Alibaba sells gaming business for over $1.5 bln and bets on AI
Chinese tech giant Alibaba Group has agreed to sell its gaming business Lingxi Games to Asian investment company Trustar Capital. The studio's value in the deal exceeds $1.5 billion, writes The Wall Street Journal citing an internal company memo and a source familiar with the details of the transaction.
Lingxi Games CEO Zhou Binshu confirmed the sale agreement, calling it part of Alibaba's overall strategy to focus on key areas. The company did not officially disclose the exact amount of the deal.
The sale of the gaming business occurs against the backdrop of Alibaba's massive restructuring around two main areas - e-commerce and artificial intelligence with cloud technologies. The company is gradually divesting assets it does not consider key and directing more capital into AI.
In February 2025, Alibaba announced that over three years it will spend at least 380 billion yuan, or about $53 billion, on developing artificial intelligence infrastructure and cloud computing. This amount exceeds all the company's investments in these areas over the previous decade.
Alibaba concentrates resources on AI
The bet has already started to bring noticeable results to the company. At the end of the last fiscal year, external revenue of Alibaba's cloud division in the March quarter grew by 40% year-on-year. The company attributes the acceleration to active adoption of AI services by corporate clients.
Alibaba develops its own Qwen model family and simultaneously builds cloud infrastructure for training and operation of artificial intelligence systems. Company chairman Joe Tsai said in June that Alibaba is effectively making a full-scale bet on AI, estimating the potential global technology market in tens of trillions of dollars.
To fund key areas, Alibaba has been selling non-core assets over recent years. In particular, at the end of 2024, the company divested stakes in hypermarket chain Sun Art and department store operator Intime for a total of approximately $2.6 billion.
After the deal, Lingxi Games will become another major asset leaving Alibaba's structure. At the same time, the Chinese video game market itself remains profitable: similar optimization is being carried out by ByteDance, which also reduced its presence in the gaming sector against the backdrop of increased investment in artificial intelligence.
Thus, the sale of Lingxi Games is part of a broader change in Alibaba's structure: the company is freeing capital from secondary areas and concentrating investments on e-commerce, cloud infrastructure, and AI, which management calls the main engines of long-term growth.
Based on: The Wall Street Journal, Alibaba Group
