Alibaba (NYSE: BABA) stock gained more than 1% overnight as investors responded to news the company is selling its Lingxi Games unit to private equity firm Trustar Capital for at least $1.5 billion.
The divestment signals a deliberate effort by Alibaba to shed non-core businesses and concentrate capital on artificial intelligence and cloud computing infrastructure.
The sale is part of a broader strategic overhaul being driven by CEO Eddie Wu, who has made AI and cloud services the central priorities for the company’s next phase of growth.
Lingxi Games is known for Three Kingdoms: Strategy Edition, a multiplayer strategy title developed in partnership with Japan’s Koei Tecmo Holdings Co.
By exiting the gaming business, Alibaba frees up resources that can be redirected toward AI model development, data centers, semiconductor investment and cloud services expansion.
Alibaba has set an ambitious target of generating $100 billion in AI-related revenue within five years, reflecting the scale of transformation the company is pursuing.
Eddie Wu has indicated that strong demand for data centers and chips could push the company beyond its three-year RMB380 billion, or approximately $56 billion, investment commitment.
Alibaba’s Qwen model family is emerging as a significant force in the global open-source AI landscape, surpassing 3 billion downloads worldwide over the past six months.
The Qwen ecosystem now includes more than 460 models and over 300,000 derivatives, placing Alibaba well ahead of Google’s 418 million downloads and Meta’s 227 million downloads in the same period.
This positions Alibaba alongside Chinese AI developers such as DeepSeek, Moonshot AI and MiniMax as credible alternatives to closed AI systems offered by U.S. technology companies.
Meta and Nvidia (NASDAQ: NVDA) have also introduced new open AI models in recent months, intensifying competition for developer adoption across the global AI community.
Alibaba has been transforming itself from a dominant e-commerce platform into one of the world’s largest AI infrastructure players, committing billions across cloud computing, chips and model deployment.
Retail sentiment on Stocktwits surrounding BABA remained in neutral territory, with one user writing, “Almost half the world uses Alibaba’s AI. Many more use DeepSeek and other Chinese AI models. The US AI bubble beginning to turn into an internet joke. Majority of stock investors do not know what they own.”
Despite the overnight gain, BABA stock remains down 15% year-to-date, leaving investors watching closely whether Alibaba’s AI momentum can translate into a sustained share price recovery.
