(Reuters) -Advanced Micro Devices ( AMD ) forecast first-quarter revenue above Wall Street estimates on Tuesday, betting on strong demand for its AI chips as Wall Street's technology heavyweights build infrastructure to dominate the emerging technology.

Shares of the Santa Clara, California-based company rose more than 3% in extended trading. AMD's shares fell about 18% last year, underperforming Nvidia's ( NVDA ) more than 171% rise.

The chipmaker has been struggling to keep up with demand for its advanced processors that power complex AI systems for Microsoft, Meta Platforms and other customers.

It has also benefited from a push by businesses to reduce their dependence on larger rival Nvidia ( NVDA ), whose more expensive chips dominate the market for AI processors.

The company expects revenue of about $7.1 billion, plus or minus $300 million in the first quarter, compared with analysts' average estimate of $6.99 billion according to data compiled by LSEG.

AMD- one of the largest providers of personal computer chips- is also likely to benefit from improving demand from a wave of consumers and businesses buying new PCs that can handle generative AI tasks, after a prolonged slump.

The company reported revenue of $7.66 billion for the fourth quarter, compared with estimates of $7.53 billion.