For Google investors, a taste of '90s

For investors in Google Inc., it's the roaring '90s redux.

Shares of the Web search giant leapt 15.43 percent yesterday, on the heels of a 6.33 percent spurt the previous day, even as the broader financial markets continued to retreat. By the time they closed at $172.43 yesterday, Google shares had more than doubled in value since the company went public at $85 a share on Aug. 19.

The two-day frenzy of Google buying accompanied the first quarterly earnings report after the initial public offering of the Mountain View, Calif., company. Google on Thursday said it more than doubled its profits and revenues in the third quarter on the strength of a boom in narrowly targeted advertising tied to its online search results.

Robust earnings results by other Internet companies, including online auction goliath eBay Inc. and Internet retailer Amazon Inc., have fueled a conviction among investors that Web-related commerce is finally starting to have the impact many predicted a decade ago.

One of the factors propelling yesterday's leap was a report by Mark Rowen, an analyst for Prudential Equity Group, who raised his price target for Google shares to $200. But the back-to-back jumps in Google's stock price, harkening back to the technology trading frenzy of the late 1990s, drew a skeptical reaction from many financial professionals, even those who admired Google's search engine.

''It's a very 1990s stock," said John Dorfman, president of Dorfman Investments, a money management firm in Newton. ''I think speculative enthusiasm for Google has gotten ahead of the excellent prospects for the company. Google is in maybe the sweetest spot of its growth trajectory, but you can't expect it to grow like this forever."

Noting that Google was trading yesterday at roughly 14 times its book value and more than 12 times its projected annual revenue, Dorfman warned, ''No company is worth 12 times revenue. I would not buy it. And as of this morning, I began thinking about shorting it."

Others said Google's share price might be justified on the firm's fundamentals, though the stock run-up made them nervous.

''The whole Google move since its offering has been counter to the market trend," noted James M. Weiss, founder of Weiss Capital Management in Concord. ''There's more going on other than rank speculation. There's very strong earnings and very strong growth. Google has superior technology in the important area of search, and buying the stock today is like buying an option on the future."

In addition, while company officials this week fended off analysts' queries about their technology strategy, there is a growing sense in the financial world that Google's ultimate goal is developing a Web-based computing platform that can dominate Internet commerce.

''They're doing a lot more than tweaking algorithms," said Mark Mahaney, senior analyst with American Technology Research in San Francisco. ''Somebody who's thinking about buying Google's stock should be aware they're taking on Microsoft, and that's a major competitive risk."

Robert Weisman can be reached at weisman@globe.com.