Dec 3 (Reuters) - Chipmaker Marvell Technology

forecast fourth-quarter revenue above estimates on Tuesday,

betting on robust demand for its custom artificial intelligence

chips from businesses adopting booming generative AI technology.

Shares of the Santa Clara, California-based company rose

more than 8% in extended trading following the results. The

stock hit a record high during Tuesday's trading session.

Marvell's ( MRVL ) shares have risen nearly 60% this year as Wall

Street pours billions of dollars into AI-linked stocks, placing

huge bets on the future of genAI technology.

Shares of larger competitor Broadcom ( AVGO ) have rallied

about 50% this year.

Demand for advanced chips that can support the complex

processing needs of genAI has soared as companies race each

other to develop the most sophisticated models.

The company forecast fourth-quarter revenue of $1.80

billion, plus or minus 5%, compared with analysts' average

estimate of $1.65 billion, according to data compiled by LSEG.

While the market for AI processors is dominated by Nvidia ( NVDA )

, Big Tech has been vying to reduce its dependence on

the chip leader's supply-constrained semiconductors, which has

helped companies such as Marvell ( MRVL ).

Marvell ( MRVL ) said on Monday it had expanded its partnership with

Amazon.com ( AMZN ) and entered into a five-year agreement with

the tech giant's cloud unit, which includes supplying custom AI

products.

Revenue in Marvell's ( MRVL ) data center segment grew 98% to $1.10

billion in the third quarter from a year ago. Its total

quarterly revenue was $1.52 billion, beating estimates of $1.46

billion.

The company expects its AI revenue to triple to more

than $1.5 billion this year and hit $2.5 billion for the next

fiscal year, CEO Matt Murphy had said at a company event in

April.

Revenue derived from custom AI chips alone could be

between $2.5 billion and $3 billion in 2025 for Marvell ( MRVL ), with

optical equipment adding another $1.5 billion to $2 billion to

AI revenue, Jefferies analysts had said in a note in October.

On the other hand, customers in the company's other

end-markets such as wireless carriers have been working to drive

down chip inventory after excessive buying during the pandemic

resulted in a supply glut.

Marvell ( MRVL ) forecast an adjusted gross margin of 60% for the

fourth quarter, compared with estimates of 61%.

A significant share of Marvell's ( MRVL ) revenue is now derived from

custom AI chips as AI-linked demand rises. The company's custom

chips typically carry lower margins than its off-the-shelf

products, known as merchant products.

Marvell's ( MRVL ) enterprise networking segment posted a 44% fall to

$150.9 million in revenue, while that of the company's carrier

infrastructure unit declined 73% to $84.7 million.

The company recorded adjusted earnings of 43 cents per share

in the third quarter, compared with estimates of 41 cents.