Alibaba could lead a $1 billion round in a mysterious Google-backed startup that raised $542 million a year ago

Jack MaBryan Thomas/Getty ImagesAlibaba Group founder and Executive Chairman Jack Ma.

Alibaba is in talks to lead a new $US1 billion round of funding in Magic Leap, the Google-backed “cinematic reality” startup that raised $US542 million last year, according to Recode.

The report said Alibaba could invest about $US200 million in this round, citing anonymous sources. Recode’s report comes just a few days after the South Florida Business Journal reported that Magic Leap is close to raising a $US1 billion round at a $US4.5 billion valuation.

Magic Leap’s new funding would make it one of the largest single rounds of funding in history. Uber raised $US1.2 billion, on two separate occasions, in 2014, while Facebook raised $US1.5 billion in single round back in 2011. Magic Leap has raised $US592 million since its founding in 2011, including a Google-led $US542 million round in October 2014.

Magic Leap’s technology and business still remain largely unknown. The company has released a number of videos showcasing its “augmented reality” capability, but not a lot has been revealed about its actual product. It basically projects 3D holograms on top of the real world, allowing users to see the digital images through special glasses.

Just last week, Magic Leap shared a new video demonstrating its technology, and then updated its website with breathtaking highlights of its augment reality capabilities, such as a scene in which a massive whale suddenly surfaces from below the floor of a school gym.

The new investment would also signify Alibaba’s continued expansion into new areas of business. Alibaba has spent about $US23 billion in strategic investments, according to its latest earnings presentation, which includes online payments company ANT Financial and China’s YouTube-equivalent service Youku Tudou.

In fact, earlier this month, Alibaba offered to buy the rest of Youku for roughly $US3.5 billion, after spending $US4.3 billion to buy retailer Suning Commerce Group and $US1.2 billion for majority stake in AutoNavi holdings.

The new investments could offset some concerns over Alibaba’s slowing revenue growth and the weakening Chinese consumer market in recent months. Alibaba shares have hit a record-low $US57.20 in late September, 16% below its IPO price, and at one point lost $US150 billion in market value, according to Bloomberg. But Alibaba shares seem to be recovering as they have gained over 30% in recent weeks.

We’ll find out more about Alibaba’s plans on Tuesday when it reports its third quarter earnings. Wall Street expects 21.3 billion yuan, or $US3.3 billion, in revenue and earnings of 3.45 yuan, or $US0.54, per share.

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