Good Night, Google Bears

So, just another blowout quarter at Google? Maybe not. This time, it's accompanied by a subtle but significant shift in the way investors are regarding the Internet sector. Suddenly, investing in the Internet has become very simple -- just buy Google.

Implicit in Google's often proclaimed vision of organizing the world's information is the idea that Google isn't simply an Internet company, it's the Internet itself. For years, people have joked about Google becoming an overwhelming powerful company the way they used to joke about Microsoft(MSFT Quote) or, before that, Ma Bell.

But at some point, you have to wonder -- when does the joke become reality?

All along, there was one company that kept in check the idea of Google's global domination, and that was Yahoo! . Google and Yahoo! split the high-calorie, ever-expanding pie of Internet ad revenue, and the horse race between the two companies meant there were at least two options when it came to investing in the Internet.

This week, it became painfully clear just how winded Yahoo! has become in that race. One of the more interesting analyst notes to be released in the wake of Google's earnings report was not on Google, but Yahoo!. Stifel Nicolaus' Scott Devitt lowered his rating on Yahoo! from buy to hold.

"There is one company to recommend in the large-cap Internet media/search sector, Google," Devitt wrote. Stifel Nicolaus has no underwriting relationship with Google or Yahoo!.