Alibaba to sell gaming unit for $1.5 billion amid AI push

Alibaba Group Holding Ltd. plans to sell its gaming division for approximately $1.5 billion, a move the company said aligns with its strategy to focus on artificial intelligence and cloud services.

The gaming unit, which operates under Alibaba’s broader entertainment and media segment, will be sold to an undisclosed buyer, according to a regulatory filing. The transaction is expected to close by the end of the current fiscal year, subject to customary approvals.

The divestment reflects Alibaba’s broader shift toward higher-growth areas such as AI, enterprise cloud computing, and digital infrastructure. The company has accelerated investments in these sectors amid intensifying competition in China’s tech landscape and regulatory scrutiny over data and content platforms.

Alibaba’s gaming arm has faced challenges in recent years, including slower growth in mobile gaming and tightening regulations on online entertainment in China. The sale is part of a broader restructuring effort to optimize capital allocation and reduce operational complexity.

Proceeds from the deal will be reinvested into Alibaba’s core businesses, including its cloud computing division, which has emerged as a key growth driver. The company reported a 4% year-over-year increase in cloud revenue for the first quarter of 2024, reaching $4.3 billion.

Analysts view the divestment as a prudent step to enhance shareholder value, particularly as Alibaba navigates macroeconomic headwinds and regulatory pressures. The company’s shares have underperformed peers in recent quarters, reflecting investor caution over its growth trajectory.

A spokesperson for Alibaba declined to comment on the buyer or further financial details of the transaction.