Ali sells his “son” who earns 2 billion dollars a year: All in AI to buy GPUs in exchange for money
Source | Pencil Path
Author | Huang Xiaogui
Original title:Ali sells his son who earns 2 billion dollars a year: buy a GPU in exchange for money
For 10.1 billion yuan, Alibaba sold a “chicken that can lay eggs.”
On August 17, Zhou Bingshu, CEO of Lingxi Mutual Entertainment, issued an internal letter stating that Alibaba will sell its shares in Lingxi Mutual Entertainment.
Xinchen Capital became the new shareholder, and the original management team continued to be responsible for the company's operations.
According to the 21st Century Economic Report, Alibaba sold Lingxi Mutual Entertainment for at least 1.5 billion US dollars (about 10.1 billion yuan).
Currently, Alibaba and Xinchen Capital have not officially disclosed the transaction amount.
Lingxi Mutual Entertainment is a high-quality asset, with an annual net profit of 1.5 billion to 2 billion yuan;
With “Three Kingdoms: Strategic Edition”, a stable cash cow, the number of users worldwide surpassed 100 million.
“Exchange money to buy a card (GPU).” Huang Wei (pseudonym), a person familiar with Alibaba, told Pencil that it was sold at this time.
In order to concentrate resources and invest in computing power, Ali of All in AI has entered a state of “full agent and model development, and scene access”.
- 01 - Sell cash cow and invest in AI
Lingxi Mutual Entertainment is located in Guangzhou. Its predecessor, Jianyue Technology, was founded by Zhan Zhonghui, a former NetEase executive.
In 2017, Ali acquired Jianyue Technology at a valuation of about 1 billion yuan and became a subsidiary. In September 2020, it officially launched the “Lingxi Interactive Entertainment” brand.
What really gave this company a foothold in the Chinese game industry was “Three Kingdoms: Strategy Edition”, which was launched in 2019.
According to Sensor Tower's previous data, the game's revenue in the first two years of its launch was over 1 billion US dollars.
In recent years, Lingxi Mutual Entertainment's annual revenue is about 3 billion yuan to 4 billion yuan, which is roughly equivalent to the revenue scale of game manufacturers in central China.
Also, according to industry media estimates such as “Game Grapes”, Lingxi Mutual Entertainment's profit in 2025 will be about 1.5 billion to 2 billion yuan.
Ali sells a profitable business to invest in a direction that is still burning money — AI.
In fiscal year 2026, Ali's capital expenditure reached 126.063 billion yuan, a record high.
Most of this is AI computing power infrastructure and data center expansion.
This input is directly reflected in the financial statements. In fiscal year 2026, Ali's revenue reached 1.02 trillion yuan, a year-on-year increase of 3%.
However, operating profit declined by 64%; adjusted EBITA decreased by 56%. Free cash flow declined from positive 73.9 billion yuan to negative 466 billion yuan.
But this isn't a gamble without a future.
Ali CEO Wu Yongming revealed, “(Ali) almost none of the cards are empty.”
In the quarter ending March of this year, Alibaba Cloud's revenue reached 41.6 billion yuan, an increase of 38% over the previous year, of which external commercialization revenue increased 40%;
The revenue of AI-related products in a single quarter was close to 9 billion yuan, accounting for about 30% of external revenue. It has maintained three-digit growth for 11 consecutive quarters.
Ali predicts that in about a year, AI-related revenue may account for more than half of cloud business revenue.
Today, growth is limited by supply, not demand. The ceiling of demand is far from being reached, but the ceiling of supply is just around the corner.
At a time when cash is in high demand, and computing power continues to be exchanged for income,
It's like, “I have an emergency at home, I'm short of money, and I'm selling something for the family.” Huang Wei described Ali's sale of Lingxi Mutual Entertainment in this way.
Lingxi Mutual Entertainment's annual profit is 1.5 to 2 billion yuan. It is a good asset, but it is not a core asset.
The strategic relationship between the game business and AI, cloud, and e-commerce is limited. Retaining it will increase profits by more than 1 billion dollars every year;
Sell it, get back more than 10 billion dollars in cash at once, and invest in AI.
And this isn't the first time. In fiscal year 2026, Ali has successively disposed of Gaoxin Retail, Yintai Department Store,
Multiple assets such as Trendyol local lifestyle services. Each of these businesses has its own situation.
However, the underlying logic is the same: shrink non-core and concentrate resources on the main line of AI.
Lingxi Mutual Entertainment sold 10.1 billion yuan, which is a bit higher than the 7 billion to 9 billion yuan expected by the market.
Xinchen Capital's premium bid shows that in the eyes of buyers, this is a high-quality asset.
For Ali, being able to sell at a high level is also considered a good time to sell.
- 02 - Give me some more cards, I can earn more
The whole industry is buying cards.
Overall, the 2026 GPU procurement budget of leading domestic manufacturers was raised from 160 billion yuan at the beginning of the year to about 230 billion yuan, a sharp increase of 44% within half a year.
The industry's outlook for 2027 is more aggressive — GPU-related investment is likely to double to 500 billion yuan.
The world is more exaggerated. According to data from Jibang Consulting, the total capital expenditure of the world's nine largest cloud vendors will exceed 886.7 billion US dollars in 2026.
The year-on-year increase was close to 90%. Amazon $220 billion, Google $1950-205 billion,
Meta $130-145 billion — all pointing in the same direction: AI computing power.
Why is it so crazy? Because I don't have enough cards, I'm in a state where I don't have you.
According to the SemiAnalysis report,
The one-year rental price for H100 GPUs soared from $1.70 per hour in October 2025 to $2.35 in March 2026,
The increase was close to 40%. The on-demand rental capacity of all types of GPUs in the spot market has been sold out — “getting GPU computing power is more difficult than buying tickets during peak season”.
One H100 SXM, the domestic price is about 250,000 yuan; the H200 is about 320,000 yuan;
The latest B200 is about 450,000 yuan. Even if it's the special version of H20 - the computing power has been cut 85%,
All that's left is video memory and bandwidth—it also costs 90,000 to 120,000 yuan each, and it's the main force of domestic reasoning.
Tencent acknowledged at the 2026 Q1 earnings conference that GPUs are not enough to “affect the growth of cloud business revenue”.
It's almost exactly the same situation Ali faced: I was able to make more money, but reality held me back.
“Exchanging money to buy a card” is an industry-level reality: whoever has more computing power can train a better model,
Run more agents and pick up more corporate customers. It's not a question of return on investment; it's a matter of survival — if you don't buy, your rivals buy it, you'll be left behind.
- 03 - You can still make money, why aren't games good anymore?
Ali sells rhinoceros for mutual entertainment; this is not an exception.
In March 2026, ByteDance cost more than 6 billion US dollars (about 42 billion yuan)
Mu Tong Technology was sold to Savvy Games Group, a Saudi sovereign wealth fund.
Mu Tong's “Endless Showdown” has long dominated the Southeast Asian market, and is also a high-quality asset with stable profits.
Even Tencent is shrinking the layout of overseas game studios.
Tencent is considering withdrawing investment from a number of overseas game studios, including Japan's Marvelous.
This act of cutting the edge, protecting the core, and sending money to AI is even more obvious in Silicon Valley.
In July of this year, Microsoft announced 4,800 layoffs, of which 3,200 were from the game business.
It also plans to divest up to 5 game studios. Studios like Compulsion Games and Double Fine will leave Microsoft.
A few years ago, Microsoft was also buying Activision Blizzard for 68.7 billion US dollars, desperately trying to expand its game layout;
Today, the same company's capital priorities have changed.
Because AI is becoming an even bigger financial black hole.
In order to bet on OpenAI, Sun Zhengyi began “acting as a seller” a long time ago.
SoftBank has successively sold Nvidia shares worth about 5.8 billion US dollars, and also sold part of T-Mobile's holdings to obtain 9.17 billion US dollars.
Arm shares were also used for financing. SoftBank's cumulative investment in OpenAI is expected to reach US$64.6 billion by October 2026.
Over the past ten years, internet giants have followed the logic of expansion: if they have cash, they buy new users, tracks, and entrances.
E-commerce companies buy shopping malls, short video companies buy games, social networking companies buy studios, and technology companies build the metaverse.
The AI era is reversing this logic.
GPUs, data centers, models, and agents all require huge ongoing investments.
US tech giants such as Microsoft, Amazon, Alphabet, and Meta have already invested hundreds of billions of dollars in AI infrastructure in 2026.
And AI is redefining the “core business” of technology companies: even if an asset can make money,
As long as it is unable to enter the most important models, computing power, and agent systems of the future, it may change from a “strategic asset” to a “sellable asset.”
This is probably where Ali sells Lingxi Mutual Entertainment more worthy of attention.
(The content of this article is for reference only and does not constitute any investment advice.)
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