Google earnings and IBM earnings were both reported late Thursday, and the tech sector listened. Today, the tech-heavy Nasdaq is falling more than 1 percent, with IBM leading the way lower, falling more than 4 percent.

Google (GOOG)'s shares are up 4 percent, but the old adage -- as IBM goes, so goes tech -- is otherwise proving true. As much as Google's going public in 2004 made it the sexiest name in the tech sector, it has yet to supplant IBM as a bellwether of things to come. So what trends does Google indicate?
"I would view Google as the barometer for all of the Internet, but not of technology," says Clayton Moran, a Benchmark analyst. "Google is largely advertising and consumer demand. With search, you need proactive consumers looking and wanting to buy online."

Large advertisers look at online search to find leads for their products and services, Google said on its conference call to analysts and investors Thursday. As the economy and online ad spending start to rebound, Google reaps more rewards than other tech companies, because the recession didn't hit the online search leader as hard as rivals, analysts said. "Google and the Internet are clearly outperforming traditional media and tech," Moran says.

Google also said it will be more aggressive with investing heavily in acquisitions, which helps companies like Google strengthen their position, says Yankee Group analyst Zeus Kerravala: "The strong get stronger. Good companies are willing to pay for growth."

Google may have to start paying more for acquisitions. "The growth rates in the future aren't going to be what they were in the past for tech," says Brian Marshall, tech analyst at Broadpoint AmTech in San Francisco. As growth rates decline, he says, mergers will increase as companies hunt for growth: "We are entering in a new golden era of tech mergers and acquisitions."

Moran predicts that growth for Google from YouTube, online advertising, and mobile-phone advertising. He upgraded Google to "buy" Friday on accelerating growth, and he sees the shares rallying another 15 percent, to $625, up from his previous price target of $500. Financial advisory group Collins Stewart raised its price target for Google shares on Friday to $635 from $600, saying that Google's earnings results indicate a continued advertising recovery.

Google management was optimistic on Thursday's earnings conference call. "They had been measured in their statements, while in this case it was 'Things have improved; we expect they'll continue to improve,'" Moran says. "Definitely a change in tone from recent conference calls, and a change from what we've heard from other management teams."

As Google rallies, it may be shedding light on the future for online advertising and Internet companies. But if you're watching where tech is heading, follow IBM's lead, which today is lower. Apple (AAPL) may also be the best yardstick for measuring tech in 2009. We'll find out on Monday, when the iMac and iPhone marketer reports earnings.

Anthony Massucci is a senior writer and columnist for DailyFinance. You may follow him on Twitter at hianthony.

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