(FORTUNE Magazine) – Everybody loves a winner. That surely accounts for much of the remarkable run by Google (GOOG, $293) so far this year. With its shares up 50% through early June, the seven-year-old Internet search firm is now one of the 50 most valuable franchises on the planet. If you think of Google as a media company--its revenues come from advertising after all--it is now the biggest in the world, with a market cap larger even than that of Time Warner. The stock's momentum has steamrolled the skeptics (see, ahem, fortune.com). But there's more than just herd mentality at work. What's driving the stock?

Booming business Online advertising is exploding in popularity, and Google--along with Yahoo--is in the sweet spot. Currently a $10 billion industry, online ad spending is projected to more than double by 2010. That's not bubble-era hype. Increasingly, the biggest advertisers in the world--such as P&G, Coke, Ford, and GM--are either shifting their ad dollars away from print and television to the Internet, or seriously thinking about it.

Index arbitrage In late May, Google surged when rumors circulated that it could be added to the S&P 500, which would force a host of index managers to buy the stock.

Technical factors Google has a relatively tiny float, about 175 million shares, so demand tends to move the stock more than buying in, say, shares of Yahoo, which has a float of 1.2 billion. Less than 2% of Yahoo's shares change hands every day and more than 7% of Google's do.

Should you buy now? Based on its trailing 12-month P/E of 115 and forward P/E of 50, investors are expecting miracles out of the stock. Over the past century the average annual return for stocks has been about 10%. If Google doubled that over the next five years--a conservative assumption relative to its P/E--by this time in 2010, it would have climbed to $200 billion in market value. That's roughly equal to the current worth of Wal-Mart, the world's largest company by revenues. It's hard to imagine Google's winning streak will last that long. --Fred Vogelstein