Cadence Design Systems beat quarterly revenue estimates on Tuesday, as strong demand for complex artificial intelligence processors lifted sales of its chip design software.

Shares of the San Jose, California-based company were up nearly 4% in extended trading.

Elevated demand for chips that can handle complex AI processes has benefited the company, which offers specialized design software for mapping out intricate circuits and blueprints for common components such as memory connectors. It also sells tools that check for overheating or electrical glitches.

CFO John Wall said strong fourth-quarter contract bookings have left the company with a record $7.8 billion worth of work under contract to be delivered in future periods, giving it strong momentum heading into 2026.

Cadence, whose customers include Apple AAPL.O and Amazon, introduced a virtual AI "agent" earlier this month to help companies such as Nvidia NVDA.O accelerate the design of complex chips, an increasingly important battleground in the U.S.-China technology race.

Cadence's fourth-quarter revenue rose 6.2% from a year earlier to $1.44 billion, beating analysts' average estimate of $1.42 billion, according to data compiled by LSEG. Adjusted profit came in at $1.99 per share for the quarter, exceeding estimates of $1.91 per share.

Cadence expects 2026 revenue between $5.9 billion and $6.0 billion, largely in line with analysts' expectations. For 2025, the company reported revenue of $5.30 billion.

It also forecast adjusted profit per share of $8.05 to $8.15 for the year, largely in line with estimates of $8.05.