Updated from 4:56 p.m. EDT

So much for the search slump.

In recent months, the spotty evidence on search pricing had divided Wall Street on the sector, with some believing spending on search ads was going through a correction. But the search bulls maintained spending was pushing full-steam ahead.

On Thursday, there were no questions that the bulls were right, as

Google

(GOOG) - Get Report

again blew past the Street's estimates with revenue nearly doubling a profit more than five times larger than the year-ago figure.

For its first quarter ended March 30, the Mountain View, Calif., company earned $369 million, or $1.29 a share, up from the year-ago $64 million, or 24 cents a share. Analysts had been forecasting a profit of 92 cents a share.

Google said its total revenue rose 93% to a record $1.26 billion in the quarter. Net revenue, or revenue excluding the fees from search-engine advertising partners, jumped to $794 million.

Google's shares were up more than 5% in after-hours trading from its official Thursday close of $204.22. That followed a 9% gain in the previous two days after

Yahoo!

(YHOO)

, Google's chief search rival, showed strong search growth in the quarter and its CFO maintained that

overall spending by advertisers remained robust.

With Google's numbers out, the health of the burgeoning search industry is clearer. The company noted that strong traffic, together with advertisers' growing embrace of the Internet and Google's ability to monetize search, led to the gains.

"As soon as Yahoo!'s numbers were out, you knew that Google was going to do very well in revenues," says Mark Mahaney, an analyst at American Technology Research, which does no underwriting for companies. "That's not where the surprise came. The big surprise came in the high margins, which came not just from the search business but from the fact that Google is running the company efficiently."

Among the more impressive figures was the increase in operating income, which at $443 million was 185% above the year-ago number and 46% larger than the previous quarter's number. That gave Google an operating margin of 35.2%, up from 29.4% in the previous quarter.

Far from seeing a slowdown in search-related ad revenue as big spenders like

eBay

(EBAY) - Get Report

pared back their marketing spending, Google indicated the search business would keep growing for a while.

"We continue to see broad growth in us and across international markets, and we're just beginning to see the penetration of this kind of technology," Google CEO Eric Schmidt said in a conference call. "We're not seeing any saturation in our key markets. In fact, there seems to be plenty of upside. There's nothing to call out that's anomalous."

In repeating Google's usual refusal to give earnings guidance, Schmidt went a step further -- discouraging analysts and other Google-watchers from reading future trends in scattered evidence like anecdotal ad pricing.

In a move that's sure to make hairs stand on end in Yahoo!'s boardroom, Google made clear its plans to go after branded advertising -- until now a domain that Yahoo! had been master of. By allowing its search pages to show more graphical elements to push corporate brands, Google will push into a lucrative new ad market this year.

"We have a number of efforts to get advertisers to be more graphical," said Larry Page, a Google co-founder. "You'll see us roll those out in much greater force over our content network to create a bigger market for those kinds of advertisers."

That move is notable for two reasons: First, Google's international growth has outpaced Yahoo!'s. In fact, Google's overseas revenue grew 36% in the first quarter, faster than the 30% rate in the previous quarter. That makes Google a stronger global platform for large companies to use in reaching out to far-flung markets.

Second, it shows Google is going gangbusters after the deepest pockets in the ad world. "We are in the process of making changes in our direct sales force to even more fully cover the large Fortune 1000 firms," said Schmidt. "It's clear that that's a vastly under-penetrated space."

Schmidt did hint in a roundabout way that the coming couple of quarters could be a little less impressive than Google's past two runaway performances. Not only are the second and third quarters seasonally slow for search traffic, but that sluggishness was offset last summer by the introduction of a new ad service.

"I don't know if we'll have a product of that magnitude over this summer," Schmidt said. "It may not be directly comparable."

Google's other co-founder, Sergey Brin, addressed the concern of click-fraud, or the manipulative clicking of sponsored link results to grab a share of the revenue. "It hasn't been a material issue for Google. We're managing it very well," Brin said. "We have sophisticated technology that eliminates a lot of that right off the bat."

As Brin shared his thoughts on click fraud, however, he turned to a bigger threat: Yahoo!. "Our advertising model gives advantages over other ad networks," he said. "We're moving to a world where we can show clear value to advertisers by going beyond clicks to conversion rates."

In other words, Google is not only going after Yahoo!'s branding business, it's claiming to do it with superior search technology. Yahoo! has proven apt at keeping pace with Google, however. The horse race continues.