Googly-eyed: Shares of Google have continued to soar since going public last August.

More about Google and Net stocks • No Google's in this year's tech IPO class • Amazon.com: Wild about Harry • Let's make a deal • MONEY: Time to make a bid on eBay? • Dot-com mania, part II? • Bowling for Google • Ga-ga for Google's 1q results • Google chiefs agree to work for $1

NEW YORK (CNN/Money) - Shares of Google, the popular search-engine company, surpassed the $300 level for the first time on Monday, sparking memories of the dot-com stock craze of the late 1990s.

Google (Research) gained 2.3 percent to finish at $304.10, slightly below its high for the day of $304.30. The stock has now gained nearly 260 percent since it went public last August at $85 a share.

Much of the optimism surrounding Google comes from the fact that it is the leader in the white-hot online advertising industry. The company reported much better than expected sales and earnings for the first quarter, thanks to a booming market for online advertising, particularly ads tied to specific keyword searches.

And during the past few weeks, Google has released several new features -- including a desktop search function for businesses and a test version of a personalized home page tool -- that should help the company remain competitive against rivals Yahoo! (Research) and Microsoft (Research).

Several analysts have also speculated that Google will soon launch an online payment service that could compete against eBay's (Research) PayPal. In addition, many investors have been betting that the company, which now has a market value of nearly $85 billion, will soon be added to the benchmark S&P 500 index.

But the stock's meteoric rise as of late -- shares have surged more than 50 percent since the company reported first-quarter results in mid-April -- has some analysts thinking that the stock could take a hit in the near future.

"You might see the stock pause temporarily," said Marianne Wolk, an analyst with Susquehanna Financial Group. "For the longer term, we're still very bullish but in the very short term it wouldn't be a surprise to see the stock stabilize or pull back."

The key for Google will be how strong its second quarter results are. Google is set to report these numbers on July 21. Analysts expect Google's sales, excluding revenues it shares with affiliates, a figure known as traffic acquisition costs or TAC, to come in at $840 million, nearly double last year's levels. Earnings, excluding certain one-time charges, are forecast at $1.21, an increase of 121 percent from a year ago.

Wolk thinks that Google should meet these targets but does not believe the company will report results that are significantly better than consensus projections. And if Google does not continue to beat estimates, the stock could take a bath.

"For Google to keep heading higher, it's absolutely critical that they keep hitting numbers. Everyone now believes the story," said John Tinker, an analyst with ThinkEquity Partners.

Still, many investors are finding it hard to bet against Google because it has been posting extremely strong levels of sales growth and healthy profit margins as a public company. So the comparisons to the late 1990s, when shares of many unprofitable Internet companies soared solely due to hype, may not be apt.

To that end, Google is expected to generate nearly $3.6 billion in sales, excluding TAC and revenue of $5 billion next year as the company continues to benefit from a shift of advertising dollars from more mainstream media sources such as television, radio, and newspapers, to the Web.

In addition to its ubiquitous search engine, Google has branched out into related areas in order to capitalize on the boom in online advertising. The company has a comparison shopping site, Froogle, a free e-mail service called Gmail which features ads embedded in e-mails, and a local search site that operates as kind of a Web version of the Yellow Pages.

Google also has expanded rapidly abroad, with sales from outside the U.S. accounting for nearly 40 percent of total sales in the first quarter.

What's more, some argue that Google is not overvalued, since it continues to trade at a discount to its top rival, Yahoo. However, this gap has narrowed significantly as of late. Google's price-to-earnings ratio, based on 2005 earnings estimates, is 58. Yahoo trades at 61.5 times earnings estimates for this year.

"Google is not an undiscovered stock any more," said Tinker. "It's no longer inefficiently priced."

And Google also potentially faces the issue of the summer sluggishness that typically affects Internet stocks. Last year, shares of several Internet companies plunged in July as results did not live up to lofty expectations.

"I'd rather be a little conservative in the face of a seasonal slowdown. It's not worth stepping up to the plate now," said Clayton Moran, an analyst with Stanford Financial Group. "If Google does miss earnings, the stock will pull back a lot more than it will go up if they beat. And if Google is going to miss, it would be the second quarter or third quarter."

Is Google still a buy? Click here.

For a look at Google and other Internet stocks, click here.

Analysts quoted in this story do not own shares of the companies mentioned and their firms have no investment banking ties to the companies.