Alibaba Agrees To Sell Lingxi Games To Trustar Capital As AI Focus Intensifies

Alibaba Group has agreed to sell its gaming subsidiary Lingxi Games to Asian private equity firm Trustar Capital, as the Chinese technology giant continues streamlining non-core businesses while concentrating investment on artificial intelligence and cloud computing, according to Reuters.

 

TL;DR

 

• Alibaba and Trustar Capital have reached a formal agreement for Alibaba to transfer its entire stake in Lingxi Games.
• Reuters reports Alibaba could receive more than $2 billion, while other reports value the gaming business at more than $1.5 billion.
• Lingxi's existing management will remain in place.
• The divestment comes as Alibaba increases investment in its AI and cloud businesses.

 

Alibaba and Trustar Capital reached the agreement after several rounds of discussions, according to an internal memo sent to Lingxi employees by CEO Zhou Bingshu and reviewed by Reuters.

Under the agreement, Alibaba will transfer its entire stake in Lingxi Games to Trustar, while Zhou and the company's existing management team are expected to continue running the gaming business. Neither Alibaba, Lingxi nor Trustar immediately responded to Reuters' requests for comment.

"The transaction is part of Alibaba's overall road map to sharpen its strategic focus," Zhou said, according to The Wall Street Journal. He also told employees that Alibaba was handing over Lingxi to allow it to focus more closely on its strategic priorities.

 

How Much Is The Lingxi Games Deal Worth?

 

The exact value of the transaction remains unclear.

A source familiar with the matter told Reuters that Alibaba is expected to receive more than $2 billion from the sale. However, Bloomberg and The Wall Street Journal have reported that the transaction values Lingxi at more than $1.5 billion.

The internal memo itself did not disclose the purchase price or a timeline for closing the deal.

Lingxi Games is based in Guangzhou and is best known for mobile strategy game Three Kingdoms: Strategy Edition, which was developed with Japan's Koei Tecmo. The studio underwent a management shake-up in 2024, when Zhou took over after members of the previous leadership team stepped down.

The game was a significant commercial success. Reuters previously reported, citing Sensor Tower, that it generated more than $1 billion in revenue during its first two years following its 2019 release.

Alibaba Sharpens Its AI And Cloud Strategy

 

The sale comes as Alibaba increasingly organizes its business around AI and cloud computing.

Alibaba officially describes itself as a technology company focused on "AI + Cloud and consumption". The company has also committed at least RMB380 billion, approximately $53 billion, to AI and cloud infrastructure over three years, an investment exceeding what it spent on the two areas during the previous decade.

Alibaba CEO Eddie Wu has repeatedly identified AI and cloud as strategic priorities.

"We have entered into an investment phase to build long-term strategic value in AI technologies and infrastructure," Wu said while announcing Alibaba's September-quarter 2025 results. He added that the company's two core businesses of AI + Cloud and consumption continued to grow amid the investment push.

Alibaba has also continued expanding its Qwen AI model family. On August 3, 2026, the company launched Qwen3.8-Max, a 2.4-trillion-parameter multimodal model that Alibaba describes as its largest and most capable Qwen flagship model to date.

The company says it is targeting more than $100 billion in combined external cloud and AI revenue over the next five years. It also expects AI model and application services to become an increasingly important part of Alibaba Cloud's business.

Alibaba has already been trimming businesses it considers non-core. Chairman Joe Tsai and CEO Eddie Wu said in a shareholder letter that the company had streamlined its portfolio with divestitures including retailer Sun Art and department store chain Intime, while concentrating on e-commerce and AI + Cloud as its two core businesses.

The Lingxi deal extends that strategy into gaming. However, Alibaba has not said that proceeds from the sale will be specifically earmarked for AI spending, meaning the transaction is better viewed as part of its broader portfolio restructuring and AI-focused strategy rather than direct financing for its AI investments.