(Reuters) -Chipmaker Marvell Technology forecast quarterly revenue below market estimates on Thursday, disappointing investors who are accustomed to strong results from artificial intelligence-facing firms and sending its shares down 12% after hours.

Shares of the company - which designs custom chips to power AI workloads for big tech companies including Microsoft ( MSFT ) and Amazon ( AMZN ) - have fallen 30% this year, as investors have doubted Marvell's ( MRVL ) position in the data center market.

With investments in AI surging, chipmakers are facing tougher investor scrutiny as Wall Street's lofty expectations leave little room for disappointment. 

The company reported a smaller-than expected rise in second-quarter revenue in its data-center business - up 69% to $1.49 billion versus an average estimate of $1.51 billion, according to LSEG data.

Marvell's ( MRVL ) CEO Matthew Murphy said on a post-earnings call that data center revenue in the third quarter will be flat on a sequential basis, but that the fourth quarter would be substantially stronger.

The bleak October-quarter outlook calls for a decline in Marvell's ( MRVL ) custom ASIC business, which was a negative surprise for investors, said Kinngai Chan, analyst at Summit Insights, referring to application-specific integrated circuits, or chips designed for specific tasks.

"We were expecting growth to accelerate for its custom ASIC business as Marvell ( MRVL ) has design wins with multiple hyperscale customers. Instead, management talks about 'lumpiness' in its custom ASIC business," he said.

Marvell ( MRVL ) did not say what caused the weakness in the business, but Murphy said "lumpiness" was normal when large cloud compute providers build out infrastructure.

A media report said recently that Microsoft ( MSFT ) had delayed the release of some of its upcoming in-house AI chips until 2028 or later, impacting Marvell ( MRVL ) as it is set to design some components for the chips. As well, Marvell's ( MRVL ) other large customer Amazon's ( AMZN ) cloud business AWS has been losing ground to Microsoft's ( MSFT ) Azure and Alphabet's Google Cloud.

AWS reported a 17.5% increase in revenue in the second quarter. By comparison, sales for Microsoft's ( MSFT ) Azure rose 39% and Google Cloud gained 32%.

Stifel analyst Tore Svanberg said, though, that Marvell ( MRVL ) was well positioned to capitalize on the ASIC market, "but it will take 12-18 months before that business becomes more diversified to deliver more consistent beats-and-raises."   

Chip giant Nvidia's ( NVDA ) CEO Jensen Huang on Wednesday dismissed concerns about an end to a spending boom on AI chips and said opportunities will expand into a multi-trillion-dollar market over the next five years.

Marvell ( MRVL ) expects third-quarter revenue of $2.06 billion, plus or minus 5%, compared with analysts' average estimate of $2.11 billion.

For the second quarter ended August 2, Marvell ( MRVL ) posted revenue of $2.01 billion, in line with analysts' estimates.

The company completed the $2.5 billion sale of its automotive ethernet business to German chipmaker Infineon Technologies earlier in August.