Driven by stellar first-quarter results that surprised analysts, Google shares surged $89.87 to finish at $539.41. It marked the biggest one-day gain since Google's initial public stock offering in August 2004, leaving the shares at their highest closing price since January.

Google had lost favor with investors as Web surfing data and the faltering U.S. economy raised concerns that people aren't clicking as frequently on the advertising links that generate most of the Mountain View, Calif.-based company's revenue.

The trend threatened to chip away at Google's earnings because the company typically gets paid by the click.

Although there were signs of decelerated clicking in the United States, Google more than offset that by expanding its foreign business and tweaking its online ad system to help reap more revenue per click.

Dinosaur Securities analyst David Garrity is convinced that the worst is over for Google's stock, which was down 35 percent this year before the first-quarter earnings changed investor sentiment.

"We think [Google's stock] has seen its 2008 low. Onward and upward," wrote Garrity, who expects the price to hit $750 during the next year.

Yesterday's rally still left Google shares well below their peak of $747.24 reached less than six months ago.

Whether Google's stock can return to where it once was will depend largely on how much more its ad revenue growth tapers off. With annual revenue headed toward $20 billion, it's becoming more difficult to produce the hefty gains that excite investors.

For instance, Google's first-quarter revenue climbed 42 percent. That's impressive, but well below the 63 percent growth in 2007's first quarter.

Google's profits could be squeezed later this year if it has to spend more money to upgrade the data centers that power its search engine and other online services such as e-mail, Collins Stewart analyst Sandeep Aggarwal said.

Microsoft Corp.'s bid to acquire Yahoo Inc. also could create a more formidable competitor to Google. Google is trying to help Yahoo thwart Microsoft's takeover bid by using its lucrative advertising system to place commercial links on Yahoo's Web site. The potential partnership would likely face antitrust scrutiny.

If nothing else, analysts believe Google wants to delay a combination between Microsoft and Yahoo for as long as possible to give it a better chance to widen its lead in the Internet search market, which generates the biggest chunk of online advertising.

Google ended the first quarter with a 60 percent share of the U.S. search market, up from 58 percent at the end of the fourth quarter, according to comScore Media Metrix. Yahoo was in second at a 21 percent share, followed by Microsoft at 9 percent.

Despite the challenges ahead, Google still has ample opportunities to grow as advertisers shift more spending to the Internet from newspapers, magazines, radio and television.

The Internet is expected to capture about 7 percent, or $44 billion, of the total worldwide advertising market this year. Analysts say the percentage of Internet advertising lags behind the amount of time consumers are spending online, suggesting that marketers will need to ramp up spending even more if they want to reach potential customers.

The first quarter represented a tipping point in Google's maturation into an international company that is less vulnerable to the ups and downs of the U.S. economy. Google collected most of its first-quarter revenue outside the United States for the first time in the company's 91/2-year history.