Google Is Reportedly Switching to AMD

Google Inc. is switching its servers to run on Advanced Micro Devices Inc. chips instead of those made by Intel Corp., according to a Morgan Stanley report.

Google, which has more than 200,000 servers, has started to buy Advanced Micro’s Opteron processors with almost all new purchases, Morgan Stanley analyst Mark Edelstone said. He raised his earnings estimates for Sunnyvale, Calif.-based Advanced Micro.

“Most of Google’s near-term server purchases will use AMD’s Opteron for the first time,” Edelstone said. Google “will help AMD to enjoy a significant sequential increase in their server business in the first quarter.”

Winning Google as a customer may help Advanced Micro beat analysts’ estimates this quarter, San Francisco-based Edelstone wrote.

The switch may also come as a blow to Intel Chief Executive Paul Otellini, who sits on Google’s board. Advanced Micro, the No. 2 maker of computer processors behind Intel, last quarter took more than 20% of the market for the first time in more than four years.

Edelstone raised his estimate for Advanced Micro’s first-quarter profit to 33 cents a share from 31 cents. He raised his 2006 estimate by 10 cents to $1.70 a share.

Shares of Advanced Micro rose $1.40 to $40.07.

Google spokeswoman Sonya Boralv said she wasn’t able to comment on the Morgan Stanley report.