Look at Amazon.com. They only use the Internet to change a distribution channel. Think about it: the demand for books has not increased and probably never will significantly. Sure they have made book buying very efficient and affordable - but if the demand for books has not changed, why should their stock price skyrocket? Their stock price should not be based on the growth and potential of the Internet, other than its effect on Amazon.com's market share and its potential increase within the book distribution market. With that in mind, should Amazon.com be worth more than existing booksellers that have assets like stores and land throughout the country? Compare the book values (no pun intended) of the companies in the industry. Barnes and Noble are now of course on the Internet also. That said, which company should be worth more?

To capitalize on the potential of the Internet, you need to invest in the companies that are creating a new product; which means an increase in demand. Oracle and the others that are making the Internet's technology better have this potential. A demand shift to the right is what you need for astronomical stock growth. Yahoo and others have created a new product / service that was no such thing a decade ago. Did Amazon.com? If so at what level?

The Internet has caused the retail industry to change and because of their early start, Amazon.com could become the next big player in the industry like Wal mart.  The point is that when you are deciding which dot com stock to invest in, keep in mind what their core competency is - are they creating more demand for something or merely using the internet to improve on an existing product. Fundamentally, I do not see people buying more books in the long run just because you can on the net.