Strike up the Wagner. It's time for the third and calamitous act of that epic, sprawling opera Twilight of the Tech Gods.

It's been nearly four years since the curtain came down on the first act, when the

Nasdaq

plunged to 1108 and all seemed dire. The second act was not nearly as dramatic, with giants like

Microsoft

(MSFT) - Get Report

,

Dell

(DELL) - Get Report

and

Intel

(INTC) - Get Report

scrambling to right themselves and take advantage of a changing landscape and lay plans for their resurgence.

This year, it's growing increasingly clear that these companies are not heading for a resurgence, but a tragedy. If you had bought them four years ago when the Nasdaq was nearing the bottom of its trough, you'd have lost money on all three. Microsoft is down 4.7% over four years, Dell is down 4.6% and Intel is off 3.7%.

Those declines are not exactly votes of confidence. Investors are valuing these companies today

below

where they did during the Nasdaq's darkest hours, when typical headlines read: "Investors are Sick of Tech" "What's Holding Back the Economic Revival?" and "Nasdaq Declines 3% on Gloomy Forecasts."

Each of these companies has unique explanations as to why they are seriously lagging every major stock index (the

Dow Industrials

are up 18% over four years, the

S&P 500

is up 25% and the Nasdaq has gained 45%). But there is a common element to all of them: The tech world evolved away from the personal computer, and they failed to adapt.

Microsoft is suffering because software is migrating from the PC to the Internet itself. Intel did a noble job of diversifying, but it's failed to dominate as it did in the PC chip market. And Dell has run out of tricks to keep its prices low as PCs turned into a commodity.

Four years ago, a new generation of tech gods was emerging, tech companies that didn't rely on PCs for their revenues, but relied on the Internet itself.

Amazon.com

(AMZN) - Get Report

,

eBay

(EBAY) - Get Report

,

Yahoo!

(YHOO)

and, later on,

Google

(GOOG) - Get Report

returned life to the technology sector. The graph below plots out how dramatically they ascended even as the older tech giants were flagging.

New World Order
Google and Yahoo! brought tech back to life

Click here for larger image.

There's a clear gap in performance between the PC-driven and the Internet-driven companies. But more recently, even these Internet gods are looking winded. Take a look at these same stocks over the past six months, and it's harder to tell the new tech gods from the old.

Same as the Old Tech
The latest saviors are starting to look spent

Click here for larger image.

With the exception of Google, every one of these stocks is having a terrible year in 2006.

Four years ago, Microsoft, Intel and Dell ran out of tactics to keep their stocks rising. The same thing started happening to Amazon and eBay a year and a half to two years ago.

Google, and possibly Yahoo!, may yet have some life in them, thanks to the strong demand for search-related advertising. The search-growth story still has to play out, but investors have been worried for a couple of years about what new products and services Google will devise to keep its growth rate up. Without them, Google may soon join the others.

If and when that happens, who will be there pick up the baton? It's certainly not clear today. Despite all the hype over how the Internet is evolving into Web 2.0, how social networks and streaming video and wireless zones are going to take tech to the next level, what Wall Street is telling us is that there aren't any leaders on deck to take us to that next level.

And that's a big change. It used to be the savvy tech investor could simply surf from the stock of an aging giant to one on the rise: From

DEC

in the 1970s to

IBM

(IBM) - Get Report

in the 1980s to Microsoft and Intel in the 1990s and more recently the big Internet names.

But for the first time, there may be no tech name for investors to turn to should Google's rise come to a halt.

This is troublesome for a few reasons:

First, it spells bad news for funds and investors who look to the largest-cap tech companies to provide relative stability with steady capital gains. Growth is likely to happen in small startups, but big funds will find them too small to bother with, and the lay investor will find it too risky to pick out the eventual winners. For them, the guarantee that the tech sector would produce a growth star may vanish for a while.

Second, options holders, including the best managers and programmers, will have much less incentive to work at one of these tech giants. The big companies will have trouble retaining top talent. Again, this may benefit a new generation of startups, as it did in the '90s, but it will only hasten the decline of the older companies.

This isn't to say that these companies are going away. They are posting strong profits and have more than enough cash on hand to brave whatever storms lie ahead. It means their market caps will hold steady at best. And it means the tech world may just run dry of the kinds of leaders it's been used to for decades: companies whose innovation and strong management have set industry standards and generated strong growth for years at a time.

Instead, the tech industry may turn into a gerontocracy, guided by a bunch of graying old geezers, short on new ideas and big on indigestion -- the way the Japanese consumer-electronics giants, which once ruled the tech world, have looked for the past 15 years.

And that would be an ending tragic enough to depress even Wagner.