Alibaba to Sell Gaming Arm for $1.5 Billion in Boost to AI Pivot

Alibaba Group Holding Ltd. is selling its gaming arm in a deal worth at least $1.5 billion that will boost the Chinese e-commerce leader’s pivot to AI.

Asian private equity firm Trustar Capital has reached an agreement to acquire Lingxi Games, according to an internal memo distributed on Monday and reviewed by Bloomberg News. “Alibaba is handing Lingxi to Trustar due to better focus on its strategic priorities,” said Zhou Bingshu, chief executive officer of Lingxi Games, without disclosing the size of the deal.

The transaction may value the studio at more than $1.5 billion, Bloomberg News reported last week. Alibaba and Trustar did not immediately respond to a request for comment.

Alibaba is undergoing a broader corporate reorganization under Chief Executive Officer Eddie Wu, divesting non-core assets while making artificial intelligence and cloud computing a top strategic priority with the aim of reaching $100 billion in AI revenue in five years.

This month, Alibaba released its biggest ever AI model, claiming performance on par with global leader Anthropic PBC in the latest Chinese breakthrough to challenge US rivals.

Lingxi’s flagship and top-grossing game, Three Kingdoms: Strategy Edition, is a massive multiplayer online strategy title developed in partnership with Japan’s Koei Tecmo Holdings Co.