Alibaba Nears $1.5 Billion Sale of Gaming Unit Lingxi Games as AI Focus Intensifies

Key Highlight of NEWS

• Alibaba is reportedly nearing a deal to sell its gaming unit Lingxi Games to private equity firm Trustar Capital.
• The deal could value Lingxi Games at more than $1.5 billion, according to Bloomberg-sourced reporting.
• Trustar has reportedly emerged as the preferred bidder after competing with other potential buyers.
• The potential sale fits Alibaba's broader strategy of reducing non-core businesses and directing more resources toward artificial intelligence and cloud computing.

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Alibaba is nearing a deal to sell Lingxi Games, its video game business, to Asian private equity firm Trustar Capital. The transaction could value the gaming unit at more than $1.5 billion. Discussions are still ongoing, and a final agreement has not been confirmed.

The potential sale comes as Alibaba sharpens its focus on AI and cloud computing. The company has been reducing its exposure to businesses that are less central to its long-term strategy.

Why Is Alibaba Selling Lingxi Games?

Alibaba has been streamlining its business portfolio under CEO Eddie Wu.

The company has been moving capital and management attention toward AI and cloud computing. Lingxi Games is a profitable and established gaming business, but gaming is no longer a core part of Alibaba's strategic focus.

Alibaba had previously been reported to seek between 7 billion yuan and 9 billion yuan for Lingxi Games. That was roughly $1.03 billion to $1.33 billion at the time. The latest reported valuation of more than $1.5 billion would exceed those earlier expectations. The potential sale also follows other asset disposals by Alibaba. The company sold its interest in Sun Art Retail to private equity firm DCP Capital for about $1.6 billion in 2025.

The broader strategy is clear. Alibaba is seeking to concentrate resources on areas it considers more important for future growth.

What Is Lingxi Games and Why Is It Worth $1.5 Billion?

Lingxi Games is Alibaba's gaming business. The company is best known for Three Kingdoms: Strategy Edition, a multiplayer strategy game launched in 2019. The title was developed with Japanese gaming company Koei Tecmo. The game has reportedly attracted more than 100 million registered users worldwide. It has also remained among China's top-grossing mobile games.

Lingxi has therefore become a mature gaming asset with relatively stable cash flow.Its value is not based only on Alibaba's broader technology ecosystem. The gaming unit has an  established product and a large user base. Alibaba acquired the business that became Lingxi Games in 2017. The original business was Guangzhou Ejoy, founded by former NetEase executive Zhan Zhonghui.

Reuters reported in 2024 that Alibaba had acquired Ejoy at a valuation of about $1 billion. A sale above $1.5 billion would therefore represent a significant valuation for the gaming business.

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What Does the Lingxi Games Sale Mean for Alibaba's AI Strategy?

The potential sale highlights Alibaba's growing focus on AI and cloud computing.

Alibaba has increasingly positioned AI as a central part of its business strategy. Its annual report states that the company adopted a "User first, AI driven" strategy and increased investment in AI model and infrastructure technology.

The company is also expanding its cloud infrastructure to support AI workloads. Selling Lingxi Games would free up capital from a non-core entertainment business. That capital could support Alibaba's investments in AI infrastructure, models, and cloud services. The move also reflects a wider shift among Chinese technology companies.

Large internet groups are increasingly reassessing entertainment and gaming assets. They are directing more resources toward AI infrastructure and AI-powered products.

For Alibaba, Lingxi Games represents a mature business with established revenue. AI represents a much larger strategic investment opportunity. The reported deal is therefore less about abandoning gaming and more about reallocating capital toward AI. If completed, the transaction would give Alibaba additional flexibility to invest in its AI ambitions while allowing Lingxi Games to operate under a new owner.

Conclusion

Alibaba’s potential sale of Lingxi Games highlights a clear shift in its business priorities. The company is reportedly moving away from gaming and focusing more heavily on AI, cloud computing, and e-commerce.

The deal with Trustar Capital could value Lingxi Games at more than $1.5 billion. However, negotiations are still ongoing and a final agreement has not been reached.

If completed, the sale would give Alibaba more flexibility to direct capital toward its growing AI and cloud ambitions.