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Google's Trickle-Down Treat

The search giant's earnings blowout has been a boon to Web stocks.

Coming off earnings reports from the major Internet companies, it's clear that investor sentiment is bullish on the sector.

But Wall Street is looking to amp up the noise even more.

In the last two weeks, major Net names, including

Google

(GOOG) - Get Alphabet Inc. Class C Report

,

Yahoo!

(YHOO)

,

Amazon.com

(AMZN) - Get Amazon.com, Inc. Report

, and

eBay

(EBAY) - Get eBay Inc. Report

, have delivered quarterly reports of varying quality.

But despite decidedly mixed results, all four companies are trading well above their levels the day before they announced, suggesting that investors were looking for reasons to believe. Investors betting on all four companies would have registered gains of 13% in just two weeks. By comparison, the broader

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Nasdaq

index remained essentially flat over the same time period.

Shares of Google have jumped $56, or 13%, since the company blew past Wall Street's expectations on Oct. 19. But Google's move makes sense in light of its continued stellar financial performance and outlook.

More revealing is the run-up in more marginally performing companies such as Yahoo!, which has spiked $1.37, or 5.7%, to $25.52 after the company announced Oct. 17 that it missed its third-quarter revenue target and guided below the consensus estimate for its fourth quarter.

Amazon, meanwhile, surged nearly 14% since it reported earnings last Tuesday, even as deteriorating operating margins continue to plague the company. And eBay has leapt nearly 16% despite revealing continuing slow growth in its core auction business.

Investors seem to be giving all three companies the benefit of the doubt, and even modest projections from management about how the company plans to put its house in order are cause for celebration. For Amazon, this meant putting a stop to sinking more money into technology investments -- some of the most recent and high-profile of which have failed to deliver results -- and focusing instead on profitability, which the company says it plans to do.

Though eBay CEO Meg Whitman said it was too early to tell decisively whether the company's efforts to rebalance its mix of sellers in a more profitable way is working, investors were happy to get on board on hints that they were.

And Yahoo!'s announcement that an already-delayed search-engine technology would not be even further delayed seemed to be the only silver lining investors needed to pile into the stock.

While little seems to have changed fundamentally for these companies, the dramatic run-up in stock prices speaks to the receptive mood of investors to the big-picture growth story being told by each company. A good part of this stems from Google's staggering performance, which has a trickle-down effect as investors are reminded once again about the potential of Internet business models.

And if Google were not enough, a growing chorus seems to be joining the fray. Earlier last week, Bank of America Securities initiated coverage on the Internet sector, rating Google, eBay, Amazon, and Yahoo! buys.

According to the firm's 12-month price targets, investors purchasing all four companies -- even in the wake of the current run-up -- would still stand to gain 23%.

BofA also issued a bullish research report about the Internet sector overall, just days after Merrill Lynch came out with a much-talked-about thought piece highlighting the virtues of the broader tech sector.

Meanwhile, researcher comScore Networks released data last week stating that e-commerce spending increased 23% in the third quarter compared to one year ago, and was on track to total $170 billion for the full year. Both data points are likely to further boost investor confidence in Internet stocks.

Bank of America wrote that it sees the emergence of a generation of users who are more attuned to the Internet and the growth of services internationally -- where they have typically lagged behind the U.S. in most regards -- as reasons for optimism.

But the report's most original and interesting concrete hypothesis may be that the growth in branded advertising will outpace search-related growth toward the end of next year. As click-fraud problems continue to intensify, the relative merits of branded advertising will become increasingly appealing, Bank of America reasons.

This leads the firm to be a big believer in Yahoo!, which with its media-rich emphasis, will be a big beneficiary of this growth. Bank of America places a price 12-month price target of $34 on the stock, meaning it's currently undervalued by a whopping 33%.

But the firm seems too eager to believe that other important aspects of Yahoo!'s strategy, such as social media, an emphasis on video, and mobile devices, will bear fruit. While some well-worn Internet moneymaking techniques finally seem to have found their grove, the cutting edge ventures that Yahoo! is hoping will deliver remain untested.

And even if they do pan out, there's no guarantee that Yahoo! is the default Internet champion. Old-line media company

News Corp.

(NWS) - Get News Corporation Class B Report

is now a big player in social media through its acquisition of MySpace, and Google's acquisition of YouTube now puts it in the lead when it comes to video.

Still, whether it turns out to be correct or not, the increasing amount of lofty commentary coming from sell-side desks is likely to prop up investor sentiment -- particularly if share prices continue to shoot up in its midst.