"Altair has had its technology out there for five or six years, and it has yet to be validated by a single top-tier industrial partner," says Nordan. "There's been no real validation in terms of commitment to ship products based on Altair's materials. What there has been is the word nanotechnology in the company name and, you know, a great deal of press-release activity."

Nevada-based Altair has been around for decades as a miner and explorer for gold. It wasn't until 2002 that it added the word "nanotechnologies" to its name. Earlier this month, investors shrugged off the abrupt resignation of its president for the last three years, Rudi Moerck -- normally a cause of concern among shareholders. But a week earlier, the stock shot up 16% on news of -- that's right -- another patent.

Diamonds in the nanotech rough are more likely to avoid calling themselves nanotech companies, even if they have a better shot at benefiting from the fruits of nanoscience. As examples of companies that could benefit, Nordan points to Cambridge Display Technology ( OLED), which makes polymer light-emitting diodes in cell phones and flat-panel displays; American Pharmaceutical Partners ( APPX), whose Abraxane drug was approved in January; and Westaim ( WEDX), which makes wound dressings.

Even with companies that are producing products based on nanotechnology, there remains the risk that the market demand for them just won't be that strong. "We're seeing again and again more technology push than market pull in nanotechnology," says Harper. "Carbon nanotubes have been around for about 15 years now, but you're still looking for that killer application. We saw this with the Internet as well: The technology got way ahead of the market pull. Too much of that overhang and you're in danger of a crash."

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