Alibaba sells its gaming arm to Trustar Capital for $1.5 billion as AI focus intensifies

Alibaba Group Holding has confirmed the sale of its gaming division, Lingxi Games, to Asian private equity firm Trustar Capital in a deal valued at more than $1.5 billion — the latest non-core divestiture as CEO Eddie Wu redirects the company's capital and attention toward artificial intelligence and cloud computing.

A Clean Break from Gaming

The transaction was confirmed through an internal memo distributed Monday and reviewed by Bloomberg News. Lingxi CEO Zhou Bingshu told employees that Alibaba is handing Lingxi to Trustar due to better focus on its strategic priorities, without disclosing the deal valuation. The memo followed Bloomberg's earlier report on August 14 that the deal was expected to value the studio at more than $1.5 billion.

Lingxi Games brings 1,200 employees, five self-developed studios, and the 9game platform to Trustar Capital. Its flagship title, Three Kingdoms: Strategy Edition, is a massive multiplayer online strategy game developed in partnership with Japan's Koei Tecmo Holdings and ranks as the division's highest-grossing property.

All In on AI

The sale is part of a broader corporate reorganization under Wu, who has been systematically shedding businesses that don't align with Alibaba's AI-first strategy. The company has committed at least RMB 380 billion (approximately $53 billion) to AI and cloud infrastructure over three years, and has set a target of reaching $100 billion in AI revenue within five years. Five of Alibaba's super data centers have been repurposed toward AI computing.

The timing underscores Alibaba's accelerating AI push. In August, the company released what it described as its most powerful AI model yet — Qwen — claiming performance on par with Anthropic's Fable in an increasingly competitive race among Chinese tech giants to challenge US AI rivals. Alibaba also partnered with Apple to integrate AI capabilities into iPhones sold in China.

Implications for China's Tech Race

Offloading even a $1.5 billion gaming division signals how serious Alibaba is about narrowing its focus. The company now competes directly with Baidu, Tencent's cloud unit, and ByteDance — all scaling AI investments aggressively — while also challenging US firms like OpenAI and Anthropic in the global model race.

For Trustar Capital, acquiring Lingxi Games at this scale is a meaningful bet that gaming remains a durable business in China even as the broader consumer tech market faces headwinds. Koei Tecmo's continued partnership on Three Kingdoms: Strategy Edition means the flagship franchise carries institutional weight that could help Lingxi maintain revenue stability under new ownership.

As reported by Bloomberg News, Alibaba and Trustar did not immediately respond to requests for comment on the deal's financial details.