NEW YORK (CNN/Money) - Will Wi-Fi be to the early 2000's what the Internet was for the late 1990's?

Short for wireless fidelity, Wi-Fi is the latest buzzword in the tech sector. The technology enables computers and other devices to connect to the Internet without being tethered to cables or phone lines.

It's been around for a few years but has really hit the mainstream this year following Intel's roll out of its own Wi-Fi chipset, called Centrino, in March.

Most of the major PC manufacturers have already started selling laptops using Centrino chips and Intel is spending approximately $300 million to promote it.

Investors have responded to the Wi-Fi hype by bidding up the shares of Intel and other chip companies that sell Wi-Fi chips. Intel's stock has soared 32.3 percent since Centrino was unveiled on March 12. Meanwhile, smaller competitors Intersil and Broadcom are up 61.8 percent and 67.3 percent respectively.

But investors may be ignoring the short-term risks for these companies.

"There are some issues that make it tough to make money on Wi-Fi," said Michael Mahoney, managing director of EGM Capital, which runs a hedge fund focusing on tech, telecom and media companies.

The tech industry is thirsting for the "next big thing" and after three years of stagnation it seems that many companies are jumping on the Wi-Fi bandwagon. In addition to the three companies already mentioned, Texas Instruments, Agere Systems, Royal Philips Electronics and privately held Atheros have all gotten in.

The problem is that all these companies have little pricing power in the short-term -- demand simply hasn't caught up to all the supply.

As a result, though the number of Wi-Fi chipset shipments should double this year, the dollar amount of sales will fall some 7.7 percent, according to a report by research firm TechKnowledge Strategies released late last month.

So far, chip companies such as Broadcom and Intersil, which are not solely tied to the Wi-Fi market, have held their own in this nascent market. But will that remain the case?

"Intel has worked very hard to build Centrino into a brand. That represents a real hurdle for other companies," said Arnie Berman, chief technology strategist for Soundview Technology Group.

One factor that could help the smaller chip companies is that last week, the Institute of Electrical Electronics Engineers formally approved a new standard for wireless technology, known as 802.11g. This technology is similar to 802.11b, the current standard used in most Wi-Fi devices, but transmits data faster.

Intersil and Broadcom already sell chips using the new 802.11g technology while Centrino runs on 802.11b. And according to the TechKnowledge report, these chips command premium prices to 802.11b chips.

Still, Intel has said that it will have chipsets supporting 802.11g by the end of the year, which could mean that more intense price competition is on the way.

Bottom line, Wi-Fi does appear to be an exciting technology that will probably be increasingly adopted by consumers and business alike during the next few years.

In the short-term, Berman said the biggest winners from Wi-Fi could wind up being the PC manufacturers themselves, companies like IBM, Dell and Hewlett-Packard, or even retailers like Circuit City and Best Buy that sell the new line of Wi-Fi notebooks.

But until the dust settles, investors might want to avoid getting caught up in the Wi-Fi hype in the chip sector.