(Reuters) - Cadence Design Systems ( CDNS ) raised the midpoint of its annual profit forecast on Monday, betting on the boom in generative AI to drive demand for its software used to design complex chips that power those systems, sending its shares up 6.4% in extended trading.

The company, which supplies both software and specialized computer servers to leading AI-chip designer Nvidia and Apple, among others, raised the midpoint of its adjusted annual profit forecast to $5.90 per share, versus the prior $5.87 per share for 2024.

Cadence's software helps automate parts of the chip design process, while allowing firms to sketch the placements of billions of transistors as they look to develop the fastest, most powerful semiconductors that act as the brains of AI systems.

The company reported a close to 20% rise in revenue for the September quarter to $1.22 billion- its biggest jump in at least six quarters. This compares to estimates of $1.18 billion, according to data compiled by LSEG.

Cadence's revenue could also benefit from the new generation of its Palladium supercomputer, that Nimish Modi, senior vice president of strategy and new ventures had said in April, would go on sale in the third quarter, with sales ramping in the fourth quarter.

The company's revenue growth is deeply tied to semiconductor firms' research and development expenditure, which has remained resilient in the face of macroeconomic pressures and is also rising, Berenberg analysts said earlier in October.

Cadence expects full-year adjusted earnings in a range of $5.87 to $5.93 per share, versus its prior forecast in a range of $5.77 to $5.97.

Cadence also narrowed the range for its annual revenue forecast for 2024. It now expects revenue in a range of $4.61 billion to $4.65 billion, compared to its earlier forecast of $4.60 billion to $4.66 billion.

(This story has been corrected to say that the company raised the midpoint of its annual profit forecast, not the range of the profit forecast for the fourth quarter, in the headline)