Google Target Rises

"The European paid search market is going through the same accelerated growth period that the U.S. market went through two years ago," Rohan says. Additionally, says Rohan, Google has the biggest share of search queries in 17 of the 20 biggest markets outside of the U.S. "It's only a matter of time before that translates into a No. 1 revenue position in sponsored search," says Rohan.

The growth of the international Internet is one of four investment themes that Rohan sees as playing out over the next three to five years. The top trend, he says, is the shift toward online advertising, particularly search. Citing a variation on a statistic that online ad boosters have cited for years, Rohan writes in a Tuesday note that Internet users spend about 15% of leisure time using the Internet, but the medium has captured only 3% to 4% of the $250 billion in annual U.S. ad spending.

A third trend is growth in combined offline/online promotions and what's known as "rich media" advertising -- online ads that incorporate animation or moving video, often with audio.

The fourth theme, according to Rohan, is cheaper and more accessible broadband connections to the Internet, which are expected to increase the volume of search and e-commerce activity.