Are the Markets Getting Too Heavy for Google to Lift?

Ever since Google’s stock-withering earnings report, I’ve had the Flaming Lips’ “Waiting for a Superman” stuck in my head. Things are indeed getting heavy, and everyone was waiting for Google to lift the sun into the sky. That didn’t happen, and Google’s stock was quickly shoved down 9.5 percent in after-market trading.

Just as it was unrealistic to expect Google to save the tech sector, sentiment is now likely to become unrealistically gloomy. Eric Schmidt swore that Google isn’t hurting from the weak economy, and he’s probably right (for now). That discussion misses the bigger point in Google’s recent numbers: The last of the Internet giants founded in the 90s is finally maturing into slower growth, and signs are the transition could be painful.

We may have seen the last quarter when Google can boast of revenue growth rates above 50 percent. (Five years ago, it was nearly 500 percent). That was inevitable, but it’s come sooner than you might like to think. Revenue growth had been gracefully decelerating until the most recent quarter, when it stumbled.

In particular, paid clicks — clicks on ads on Google’s or its AdSense partners’ sites — grew 30 percent in the latest three-month period. They grew 61 percent a year ago and held between 45 percent and 52 percent in 2007.

Also, traffic acquisition costs took a nasty and unexpected rise, to 30.3 percent of revenue from 29.1 percent a year earlier. Google chalked that up to ads on social networking sites — presumably including MySpace — not monetizing as they should.

Analysts will be parsing for days the few tea leaves Google allows in its teacup. In the end, I suspect we’ll end up with an image of Google as an older, less limber player in a game whose rules are changing as fast as ever.

Investors may have to learn to live without Google lifting the markets. Google hasn’t forgotten them or anything. They’re just too heavy for Google to lift anymore.