SAN FRANCISCO (AP) – Sometimes it’s hard to tell whether Google Inc. is operating an online search engine or a moneymaking machine.

This much is clear: the seven-year-old company keeps winning new fans, creating a franchise that investors briefly valued at more than $100 billion Friday when Google’s shares reached a new high of $346.43 on the Nasdaq Stock Market.

Even after a slight retreat, the shares finished with a gain of $36.70, or 12.1 percent, to close at $339.90. That left Google’s market value at $98 billion, or nearly $20 billion more than Hewlett Packard Co. – a Silicon Valley pioneer founded 20 years ago.

Google’s success underscores the ever-widening role that the Internet is playing in society as more people turn to the Web for information, entertainment and communication.

That trend is making Google more indispensable than ever, judging from the company’s lead in the online search market.

“More and people who haven’t ‘googled’ before are googling now,” said Martin Pyykkonen, one of the many Internet industry analysts marveling at Google’s immersion in the popular culture.

As more people use Google, the company stands to make more money from the text-based ads that it displays along its own search engine results, as well as at thouands of other Web sites.

Google gets paid every time someone clicks on one of those ads – and there’s been a whole lot of clicking going on.

In the three months ended in September, Google’s profit increased by more than sevenfold to $381.2 million. Excluding advertising commissions, revenue more than doubled to $1.05 billion.

Google announced those results after the market closed Thursday, unleashing a stampede of investors eager to buy the company’s stock Friday.

The shares have nearly quadrupled since their initial public offering at $85 just over 14 months ago – a stretch that has been marked by stunning financial growth and a steady stream of new products designed to lure even more traffic to its search engine.

The rapid runup in Google’s stock has evoked memories of Wall Street’s early love affair with another high-tech prodigy, Microsoft Corp., whose shares had surged to a fivefold gain 14 months after its March 1986 IPO.

Analysts are convinced Google’s best days are still ahead, with some forecasting a profit of more than $2 billion on revenue of $9 billion next year. Through the first nine months of this year, Google earned $1.1 billion on revenue of $4.2 billion.

The rosy outlook spurred even more enthusiam among some of the most optimistic analysts tracking Google.

Pyykkonen and ThinkEquity Partners analyst John Tinker both raised their targets for Google shares to $425, up from $350, while Citigroup analyst Mark Mahaney predicted the shares would hit $430 within the next year.

“There is definitely a bit of a ‘wow factor’ here,” Pyykkonen said. “The (company’s) earnings are looking better than you could have imagined in your wildest dreams.”

Mahaney and other analysts also expect Google’s stock to be added to the Standard & Poor’s 500, a move that would provide another lift to its stock as portfolios tied to that blue-chip index snap up more shares.

In another bullish sign, Google executives on Thursday said more Fortune 500 companies are lining up to join an online advertising network that so far has been dominated by mostly small and medium-sized businesses.

The company “appears to be tapping into new growth opportunities that may be just as significant as the ones that it already has tapped into,” Mahaney said.

Google is outperforming Yahoo Inc., the owner the Internet’s other major advertising network, largely because it has developed a formula to display ads more likely to intrigue its visitors.

That connection to the consumer zeitgeist is generating more revenue-generating clicks on the ads. Google’s system, which relies heavily on low-cost automation, ensures that a big chunk of revenue turns into pure profit.

Investors, in turn, have rewarded Google for its innovation. Google is currently worth nearly twice as much as Yahoo, whose market value during Friday’s trading stood at $52 billion.

Although it may seem like everything that Google touches turns to gold, the company still faces significant risks.

“The higher their stock price goes, the more likely that others are going to spend more money to get a piece of the action,” Mahaney said.

Microsoft and Yahoo already have been investing heavily in search, hoping to narrow its lead and, more recently, veteran media mogul Barry Diller entered the space when his InterActiveCorp bought Ask Jeeves Inc. for $2.3 billion.

Despite the tougher competition, Google remains well ahead of its rivals. The company processed 45 percent of U.S search requests in September, outdistancing 23 percent for Yahoo and 12 percent for Microsoft’s MSN, according to Nielsen/NetRatings.

Although it keeps introducing new products, Google’s profits remained tied to advertising – a field susceptible to volatile swings of fortune.

“In terms of prudence, you would like to see other revenue streams,” Pyykkonen said.

Finally, Google is expanding so quickly that it’s bound to test the management skills of its multibillionaire brain trust – co-founders Larry Page and Sergey Brin, along with CEO Eric Schmidt. The company has been hiring about 10 new employees per day during the past six months, a spree that’s expected to continue for several years.

Friday, though, Google’s leadership had little reason to stress.

After the day’s big market gains, Page and Brin, both 32, each held Google stakes worth $12 billion while Schmidt’s holdings were worth $4.7 billion.

AP-ES-10-21-05 1817EDT

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