Alibaba has agreed to sell its gaming division, Lingxi Games, to Asian private equity firm Trustar Capital for at least $1.5 billion (with some reports suggesting over $2 billion). Lingxi, best known for the multiplayer strategy game Three Kingdoms: Strategy Edition, was a profitable, growing digital business, but Alibaba CEO Eddie Wu's strategy is to shed all non-core assets and funnel capital toward AI and cloud infrastructure.
The sale is part of a broader portfolio cleanout: Alibaba sold stakes in hypermarket Sun Art and department store Intime for $2.6 billion in late 2024, and is exploring an IPO for its chip-design unit T-Head. These divestitures fund Alibaba's three-year AI capex commitment of at least 380 billion yuan (~$53 billion) announced in February 2025, which the company said exceeds its entire AI and cloud spending over the previous decade. CEO Eddie Wu told analysts in May the company would exceed that figure, and Alibaba is targeting $100 billion in AI revenue within five years.
For Alibaba, selling Lingxi signals that Wu's definition of "core" is extraordinarily narrow—no room for digital diversification, no entertainment hedge against cloud slowdown. Qwen, its largest AI model launched this month with 2.4 trillion parameters, continues compressing the frontier at lower cost; three billion downloads of Qwen variants now span hundreds of open-source derivatives. The Lingxi sale clears capital and management focus for cloud and AI infrastructure exactly as Chinese firms compete directly on token price and inference speed against U.S. labs.