There are signs of hope, but Yahoo! ( YHOO) isn't out of the woods yet.

Shares of the Internet giant had rallied more than 6% Wednesday after the company announced third-quarter results that topped Wall Street's top and bottom line expecations.

Yahoo! CEO Jerry Yang also unveiled an ambitious new plan for the company as he neared the end of a high-profile 100-day review of the company's strategy announced in July.

Still, putting Yang's plan into action will be more difficult than merely outlining a bold vision. And while Yahoo! deserves credit for finally delivering on its prior promises this quarter, investors should continue to take a wait-and-see attitude toward the stock until the company can show more proof that the plan is actually working.

That's particularly true given the fast-changing and highly competitive marketplace where Yahoo! operates.

But the quarter did bring some strong developments. The most positive was a reacceleration in the company's bread-and-butter online display advertising business, which grew almost 20% year over year. The impressive growth followed five quarters of decelerating revenue growth.

It also lends credence to management's efforts to reignite growth even as more ad space becomes available online, thanks to the rapid rise of social networking sites like Facebook and News Corp.'s ( NWS) MySpace.

"As we shared with you a year ago, social networking and a proliferation of publishing tools has fragmented user attention and this trend continues," Yahoo! President Sue Decker said Tuesday during the company's conference call for investors. "While this presented some short-term challenges for Yahoo! in the past, we are already starting to see signs of progress from our recent efforts to address this market shift and we see significant long-term opportunities that Yahoo! can uniquely address."

The eagerly anticipated results from Yahoo!'s new Panama search-ranking system, which the company launched in the U.S. early this year and continues to roll out internationally, also painted a bullish picture. Revenue per search increased another 20% over the quarter, meaning the company now makes 30% more on each search compared to a year ago.

However, much of what Yahoo! finally delivered on Tuesday should have arrived some time ago. The company has long been talking up its plans to boost display growth by putting more ad inventory on its Right Media ad exchange.

And anticipation for Panama caused Yahoo! shares to run up at the beginning of the year because of bullish management comments. Even the gains made by Yahoo! shares on Wednesday are tempered by the stock's slide of almost 3% on Tuesday ahead of the earnings announcement.

The road ahead will continue to be difficult. Yang unveiled a three-pronged strategy on Tuesday that consists of: being the starting point for a growing number of users, becoming a "must buy" ad space for more advertisers, and opening up Yahoo!'s technology platform to third- party developers so that new applications can be developed.

But becoming the starting point for even more users will be easier said than done. The personalized iGoogle starting page that Google ( GOOG) is pushing aggressively -- and which has demonstrated impressive growth -- will pose a challenge.

The same goes for being coveted by yet more advertisers. When it comes to display, the competition will only get tougher with Google's bid to buy DoubleClick and Microsoft's ( MSFT) recent acquisition of aQuantive. And in search advertising, while revenue per query gains are promising, Yahoo! continues to lose market share to Google.

Finally, while opening up Yahoo!'s platform to developers signals a promising direction, it still remains to be seen how the company plans to cash in. Any impact is likely to take a long time to kick in -- if it pans out at all.

It's a good start for Yahoo!, but too much has to be accomplished to back the company wholeheartedly at this point.