July 30 (Reuters) - Advanced Micro Devices ( AMD )

forecast third-quarter revenue above market estimates on

Tuesday, banking on demand for its artificial intelligence chips

staying strong.

Shares of the Santa Clara, California-based company rose

more than 2% in extended trading.

A rise in the adoption of generative AI technology has

driven demand for powerful chips capable of handling the

specific processing requirements of applications such as

OpenAI's ChatGPT. The frenzy of activity has boosted sales for

AMD's AI chips.

AMD benefits from large cloud operators buying the

company's AI and other chips. Some view the company as a viable

alternative to Nvidia ( NVDA ). Both Meta Platforms ( META ) and

Microsoft ( MSFT ) are customers of AMD's MI300 line of AI

chips.

The personal computer market is also recovering after

its worst slump in years as the addition of on-device AI

features drives a resurgence in end-market demand, aiding sales

for AMD, which is among the largest providers of PC chips.

The company forecast revenue of $6.7 billion, plus or minus

$300 million, for the third quarter, compared with analysts'

average estimate of $6.61 billion, according to LSEG data.

On an adjusted basis, the company forecast gross margin of

about 53.5% for the third quarter, compared with estimates of

53.6%.