By Arsheeya Bajwa and Max A. Cherney

(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 and Meta has been rising much faster than their supply from AMD and larger rival Nvidia, 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, which commands about 80% of the AI semiconductor market. 

  Analysts largely believe Nvidia 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.

(Reporting by Arsheeya Bajwa in Bengaluru and Max A. Cherney in San Francisco; Editing by Anil D'Silva and Lisa Shumaker)