(Reuters) -Advanced Micro Devices ( AMD ) forecast third-quarter revenue above Wall Street estimates on Tuesday, anticipating demand for its artificial intelligence chips from businesses rushing to expand infrastructure to dominate the latest technology.

Shares of the Santa Clara, California-based company slumped roughly 4% in extended trading. 

AMD's shares have climbed more than 40% this year, far outpacing a nearly 12% jump in the benchmark chip index, as investors bet on the company's ability to capitalize on the widespread use of AI.

Demand remains robust for AMD's advanced processors that power complex AI systems for Microsoft, Meta Platforms, generative AI leader OpenAI and other customers. The company is set to benefit from cloud giants bumping up their hefty spending plans for building AI infrastructure.

Meta has raised the bottom end of its annual capital expenditure forecast by $2 billion, to a range of $66 billion to $72 billion. Similarly, Microsoft forecast a record $30 billion in capital spending for its current fiscal first quarter to meet soaring AI demand.

AMD estimated revenue of about $8.7 billion for the third quarter, plus or minus $300 million, compared with analysts' average expectation of $8.30 billion, according to data compiled by LSEG. AMD expects third-quarter adjusted gross margins of roughly 54%, compared with estimates of 54.1%.

The outlook excludes revenue from AMD's AI chip MI308's shipments to China as license applications are under review by the U.S. government, the company said.

AMD said last month the Department of Commerce would review its license applications to export its MI308 chips to China and it plans to resume those shipments when licenses are approved. U.S. curbs announced in April required it to obtain a license to ship advanced AI processors to China.  

AMD had forecast a $1.5 billion hit to revenue this year due to these curbs, with most of the impact affecting the second and third quarters.

Adjusted for stock-based compensation and other items, AMD reported a second-quarter profit of 48 cents a share on revenue of $7.69 billion.