By Arsheeya Bajwa and Max A. Cherney

Oct 29 (Reuters) - Advanced Micro Devices ( AMD ) on

Tuesday forecast fourth-quarter revenue just shy of estimates as

supply chain constraints hamper its ability to meet strong

demand for AI chips, while the PC market grows more slowly than

some investors expected.

Shares of the Santa Clara, California-based company fell 5%

in extended trading. The stock has risen about 10% so far this

year.

Demand for AI chips from big technology companies including

Microsoft ( MSFT ) and Meta has been rising much faster

than their supply from AMD and larger rival Nvidia ( NVDA ),

limiting the chip companies' ability to tap the order surge.

Revenue in its data center business, which includes AI

chips, surged 122% to $3.5 billion, topping estimates. The

company has previously forecast it would sell more than $4.5

billion worth of AI processors this year, a figure that is

likely to receive an update during the company's earnings call.

While AMD sees strong demand for its AI chips, it still trails

front-runner Nvidia ( NVDA ), which commands about 80% of the AI

semiconductor market.

Analysts largely believe Nvidia ( NVDA ) will maintain its majority

market share for the foreseeable future, owing in part to its

entire AI ecosystem that includes the CUDA software and

networking equipment.

Capacity for the production of AI chips will be very tight

going into 2025, the world's largest contract chip manufacturer

TSMC said in July, marking a significant hurdle for

the supply of these advanced semiconductors.

The company expects revenue of $7.5 billion, plus or minus $300

million for the fourth quarter, compared with analysts' average

estimate of $7.54 billion, according to data compiled by LSEG.

AMD forecast an adjusted gross margin of roughly 54%, which met

analyst expectations.

The company reported revenue of $6.82 billion for the third

quarter, compared with estimates of $6.71 billion. AMD reported

adjusted earnings of 92 cents a share, in line with analyst

expectations.