Yahoo!, the leading internet portal site, is now worth more than Wall Street banking giant JP Morgan, and Amazon.com, the leading Internet bookseller, is worth more than leading US retailer Sears Roebuck.

Internet entrepreneurs are cashing in. Jeff Bezos, the owner of Amazon.com, has a personal stake worth $15bn, making him one of the world's richest men.

Web portals are increasingly turning into retailing sites

Amazon.com in particular is having an amazing run - with its shares virtually doubling this week alone after a share split and an announcement of a new warehouse to speed distribution. Since June, its shares have gone from $14 to $187 in value.

Yahoo! is also rolling ahead after a very good Christmas. Shares surged to a new high of $338 in anticipation of better-than-expected earnings which will be announced next week.

"Yahoo! is definitely the bellwether for the sector. Investors are generally pleased with their growth," said Mark Cavallone of S&P Equity Group, who predicted positive surprises for the quarter.

But even second-line stocks are sharing in the Internet mania. Shares in Skymall, a company that sells products to airline passengers in in-flight magazines, jumped ten times when the company announced its Internet sales were up 600% (although they still represent only 3% of its total sales).

E-trading dominates

Electronic trading has increased day-trading

The Internet stock surge is being led by people who trade shares on the web, using the new, cheap trading services like E*trade and Charles Schwab. With low commissions, they can afford to trade in and out of shares several times a day, fuelling the boom. The average investor in Internet stocks is estimated to only hold that company for less than a week.

The shortage of Internet stock also adds to the volatility. E-bay, one of the hottest Internet stocks, only has 350,000 shares outstanding. With so few shares, it is not surprising that turnover is high.

Trading on the Internet also means that rumours and speculation spreads more quickly, through the use of noticeboards and the ability of traders to instantly read press releases or news stories about the companies.

Madness or foresight?

With very few Internet companies actually making money, it is hard for analysts to work out how to value them. Looking at the long-term growth potential, as the numbers on the web continue to increase rapidly, people look for strong brands with unique products.

Key figures include the number of site visitors, operating costs, and the growth of advertising revenue. "Many are planning a pretty major increase in online ad spending this year," one analyst said.

But analysts are divided on companies like Amazon.com, which still has not made a profit despite its $30bn stock market value.

It has 4 million customers and sales approaching $1bn a year, and has branched out into videos and music CDs.

When Henry Blodget, analyst with CIBC Oppenheimer, predicted a share price of $400 before the split, the stock jumped 19%.

But Jonathan Cohen, of Merrill Lynch, believes the company is worth at most $50 a share, and says Amazon.com "is probably the single most expensive piece of publicly traded equity not only across the Internet but in the history of modern equity markets."

Huge windfalls

David Dreman, a stock market historian who has written about bubbles, says "this may be the wildest bubble of the century."

But for many of the founders of these companies, and their executives who are paid partly in share options, the Internet boom has been a windfall.

Even Amazon.com directors took the opportunity in November to cash in more than $60m in stock.