:Advanced Micro Devices on Tuesday forecast fourth-quarter revenue slightly below estimates and raised its artificial intelligence chip sales forecast to $5 billion for 2025 – not enough to impress investors.

AMD stock fell nearly 7 percent in extended trading, erasing most of the 8 percent gain over the past three trading days and much of the more than 10 percent gained this year.

Demand for AI chips from big tech companies including Microsoft and Meta has grown much faster than their supply from AMD and its biggest rival Nvidia, limiting chip companies’ ability to exploit the increase in orders. AMD CEO Lisa Su said AI chip supplies will be limited next year.

“AMD stock has been priced higher,” said Kinngai Chan, an analyst at Summit Insights. “Clearly, AMD’s outlook (in the fourth quarter) was not good enough for investors.”

Revenue from its data centers business, which includes AI chips, jumped 122% to $3.5 billion.

AMD still lags behind leader Nvidia, which controls about 80% of the AI ​​semiconductor market. Su raised the forecast for AI chips, which are included in the data center segment, by half a billion from the $4.5 billion estimated in July.

During the earnings call with analysts, Su also discussed Microsoft and Meta’s expansion in their use of the company’s AI chips. Microsoft and Oracle offer MI300X chip rentals as part of their cloud computing service.

Analysts widely believe Nvidia will maintain its majority market share for the foreseeable future, thanks in part to its entire AI ecosystem that includes CUDA software and networking equipment.

AI chip production capacity will be severely limited by 2025, the world’s largest contract chipmaker TSMC said in July, posing a significant hurdle to the supply of these advanced semiconductors . AMD’s ability to sell more of its advanced AI processors is hampered by supply constraints at TSMC, said Michael Schulman, chief investment officer of Running Point Capital.

The company expects fourth-quarter revenue of $7.5 billion, plus or minus $300 million, compared with an average analyst estimate of $7.54 billion, according to data compiled by LSEG. AMD expects an adjusted gross margin of around 54 percent, which meets analyst expectations.

The company reported third-quarter revenue of $6.82 billion, compared to an estimate of $6.71 billion. AMD reported adjusted earnings of 92 cents per share, in line with analysts’ expectations.

AMD’s results weighed on the chip sector in extended trading. Arm Holdings fell 1.7 percent, Nvidia fell 0.3 percent and Intel fell 0.4 percent. Chip equipment maker Lam Research fell 0.8 percent.

“Most investors, once they digest AMD’s strong results combined with their mediocre forecasts, will try to extrapolate what this means for the rest of the AI ​​chip and semiconductor market,” said Schulman.