Alibaba Group Holding has agreed to sell its wholly owned gaming business, Lingxi Games, to private equity firm Trustar Capital, in a transaction reportedly valued at more than $2 billion, as the technology giant sharpens its focus on artificial intelligence and e-commerce.
The divestment was confirmed in an internal letter issued Monday and signed by Lingxi chief executive Zhou Bingshu. “As part of Alibaba’s broader strategy to sharpen its focus, the group has decided to entrust Lingxi to Trustar Capital,” the letter stated.
Reported valuations for the sale have varied, with figures ranging from roughly $1.5 billion to more than $2 billion. Neither Alibaba nor Trustar Capital has publicly disclosed the final terms.
The move marks another step in Alibaba’s continued retreat from non-core sectors. Over recent years, the company has streamlined its sprawling portfolio to concentrate capital and management attention on its two priority pillars: cloud computing paired with AI, and its core commerce operations.
Lingxi Games, formerly known as Alibaba Games, has developed and published a range of mobile titles in the highly competitive Chinese gaming market. Under Trustar Capital’s ownership, the studio is expected to operate independently while retaining its existing teams and product lineup.
The gaming sale comes as Alibaba pours resources into AI development, an area where it has staked its long-term growth ambitions. The company has been expanding its Qwen family of large language models and investing heavily in the computing infrastructure needed to support them.
That strategic pivot has been visible across Alibaba’s business lines, from its push into AI-powered local services to its rollout of open-source models aimed at competing with global rivals. The company has framed AI as central to reinvigorating both its cloud division and its consumer platforms.
Divesting a profitable but peripheral gaming unit allows Alibaba to redirect funds toward these capital-intensive priorities. The Chinese gaming sector remains large but faces regulatory scrutiny and intense competition from established players such as Tencent and NetEase.
Trustar Capital, a private equity investor with a track record of acquiring consumer and technology assets, is positioned to give Lingxi greater operational latitude outside the constraints of a large parent conglomerate.
The transaction is expected to close in the coming months, subject to customary conditions. For Alibaba, it underscores a leaner corporate strategy centered on the two businesses executives believe will define its next phase of growth.