Alibaba Group has agreed to sell its gaming unit Lingxi Games to Asian private-equity firm Trustar Capital for at least $1.5 billion, a deal that marks the Chinese e-commerce giant’s latest move to shed non-core assets and focus on artificial intelligence. The sale, announced on August 17, 2026, includes 1,200 employees and five studios, according to sources familiar with the transaction.
Lingxi Games, known for the multiplayer strategy game “Three Kingdoms: Strategy Edition,” has been a video game development and publishing arm of Alibaba since 2017. The division had grown into a significant operation but no longer aligns with the company’s strategic priorities under CEO Eddie Wu, who outlined an ambitious pivot toward AI and cloud computing.
The sale reflects Alibaba’s broader restructuring effort. In March 2026, Wu announced that the company aims to surpass $100 billion in combined cloud and AI external revenue within five years, signaling a dramatic shift away from diversified business units. According to an internal memo reviewed by Bloomberg News, Zhou Bingshu, CEO of Lingxi Games, said the company was being handed to Trustar to allow Alibaba to better focus on its strategic priorities.
Trustar Capital, the Hong Kong-based private-equity firm executing the acquisition, is affiliated with CITIC Capital. The deal values Lingxi Games at more than $1.5 billion, with some sources citing the transaction at over $2 billion. This represents a significant premium over earlier valuations—in June 2026, the gaming unit was initially marketed at between $1.03 billion and $1.33 billion when Alibaba first sought buyers.
Alibaba’s cloud division has already begun delivering on the AI strategy. In May 2026, cloud external revenue growth accelerated to 40% year-over-year, with AI-related products accounting for 30% of that revenue. The sale of Lingxi Games allows the company to free up capital and management attention for these higher-growth segments.
The divestiture comes as Alibaba faces competitive pressure in cloud computing and artificial intelligence from rivals like Tencent and ByteDance. By consolidating resources around its core e-commerce, cloud, and AI businesses, the company is positioning itself to compete more aggressively in markets where growth prospects are stronger than in gaming.
Sources
- Wall Street Journal — Confirmed the sale agreement and $1.5 billion valuation, with details on Alibaba’s broader restructuring under CEO Eddie Wu.
- Bloomberg News — Reported the deal and included a quote from Lingxi Games CEO Zhou Bingshu on the strategic rationale.
- SCMP (South China Morning Post) — Provided details on the deal structure and Trustar Capital’s involvement with CITIC Capital.
- Investing.com — Reported Alibaba’s AI focus intensification and the $100 billion revenue target announced by CEO Eddie Wu.
- Business Times Singapore — Confirmed the sale as part of Alibaba’s AI pivot and strategic shift.
- Alibaba Cloud official blog — Documented cloud revenue growth acceleration to 40% year-over-year with AI products accounting for 30% of growth.
