Alibaba (BABA) stock trended higher in Monday's pre-market trading. The company is heading into its August 20 earnings report with its AI push gaining pace. Its Qwen AI models have crossed 3 billion global downloads in six months, according to Bloomberg. Meanwhile, the company is selling its gaming arm, Lingxi Games, in a deal valued at more than $1.5 billion.

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The two moves point in the same direction. Alibaba is putting more focus on AI and cloud while moving away from businesses outside its main growth plans.

Alibaba's Qwen Models Are Winning Global Adoption

Qwen has become one of Alibaba's biggest AI successes, with its open models gaining a large following among developers. The models have passed 3 billion downloads, according to data from Hugging Face.

That puts Qwen well ahead of open models from Alphabet (GOOGL) and Meta Platforms (META). Google's models recorded 418 million downloads in 2026, while Meta's reached 227 million.

Downloads are important because developers can use open models as a base for their own products. Alibaba says it has released more than 460 Qwen models, which have led to more than 300,000 derivatives.

That gives Alibaba a wider developer base for its cloud services. It also gives the company a way to reach users who may never have used its consumer products.

Alibaba Is Selling Lingxi as It Focuses on AI and Cloud

In a separate development, Alibaba has agreed to sell Lingxi Games to Trustar Capital in a deal expected to value the studio at more than $1.5 billion. Lingxi's flagship title is Three Kingdoms: Strategy Edition, a multiplayer strategy game developed with Japan's Koei Tecmo Holdings.

The sale fits Alibaba's broader effort to put more money and management attention into AI and cloud computing. Under CEO Eddie Wu, the company has been selling businesses that are not part of those areas.

For investors, the deal also provides a useful sign of where Alibaba wants to spend its capital. Rather than keeping every business under one roof, the company is freeing up resources for areas it sees as having greater growth potential.

Investors will see how that strategy is working when Alibaba reports its results later this week.

What Analysts Expect from Alibaba's Earnings?

Wall Street expects Alibaba to report Q1 FY27 revenue of $39.8 billion, up about 16% from a year earlier. Adjusted EPS is expected at $1.49, compared with $2.19 in the same quarter last year.

Those estimates reflect the cost of Alibaba's push into AI and e-commerce. The company has been spending more on AI infrastructure and subsidies, putting pressure on profit. That makes the Cloud Intelligence Group especially important this quarter. Investors will want to see whether rising demand for AI services can lift cloud growth and support better margins over time.

Ahead of the Q1 print, Barclays analyst Jiong Shao expects Alibaba to beat expectations. He sees cloud growth staying ahead of forecasts and expects AI revenue to come in above targets. Shao also expects losses from quick commerce to ease faster.

Morgan Stanley analyst Gary Yu is also bullish on the cloud business. He expects Alibaba Cloud revenue to grow 45% year over year, while cloud margins improve to about 11%.

Is BABA Stock a Good Buy?

Wall Street remains constructive on the stock. Alibaba carries a Strong Buy consensus rating based on eight Buy ratings over the past three months. The average BABA price target stands at $185.63, suggesting roughly 50% upside from current levels.