AMD said fourth-quarter revenue would be about $700m (£446m), which is 35% higher than its third quarter, overtaking its previous expectations of a 20% jump.
AMD's financial situation has been rocky over the past year amid an industry-wide slump in demand for PC processors. Lagging demand for its flagship Athlon XP processors, coupled with an increase in chip production earlier this year, resulted in AMD having to cut chip production in the third quarter to reduce its inventory of processors.
The company posted a third-quarter net loss of $254m on revenue of $508m, and announced it would lay off 2,000 workers over the next six months as part of a $350m cost-cutting drive.
The increased demand for AMD's PC processors could signal recovery in the long-depressed PC market. The fourth quarter is a traditionally strong season for PC purchases, but analysts have been unsure if this year would follow suit.
AMD competitor Intel is scheduled to provide updated fourth-quarter guidance after the close of the US stock market on Thursday.