Google, the world's biggest internet company, offered a glimmer of hope amid global financial gloom, after revealing that profits during the third quarter of the year had soared 26 per cent.

The astonishing performance is all the more impressive because the bulk of Google's earnings is derived from advertising, a business that is hyper-sensitive to economic downturns.

Last night, the California based company said that third quarter profits had soared by 26 per cent to $1.35 billion and that revenues for the period rose 34 per cent to $4.04 billion.

Traders rejoiced at the numbers because Wall Street had assumed the credit crisis which has hit the US banking sector would be replayed across corporate America. While hopes of a robust set of quarterly numbers lifted Google shares 5 per cent on Wall Street ahead of the publication of the results on Thursday, once the figures were announced, the shares shot up another 7 per cent to around $380 in after hours trading. The stock has fallen from around $800 at this time last year amid fears that a prolonged American recession would erode advertising revenues. Analysts have been steadily decreasing their projections as Wall Street had become more pessimistic for the outlook of the US economy.

Google executives have maintained that the company can still thrive because its technology does a better job of finding customers at a lower cost to advertisers than traditional marketing campaigns. Those factors, Google argues, means it could receive an even bigger slice of advertising budgets in a crumbling economy.

However, Eric Schmidt, the chairman of Google, acknowledged that even the internet's most profitable company might not be immune to the fallout from the worst financial crisis in the US since the 1930s. He said: "While we are realistic about the poor state of the global economy, we will continue to manage Google for the long term."

Google has had a good year. It managed to see off the threat of a combination between two of its most formidable rivals - Yahoo! and Microsoft - earlier this year. The collapse of the talks between the two rivals, which could have seen Yahoo! acquired for $42 billion, allowed Google to hold the lion's share of the world's internet advertising market. That market is valued at around $40 billion but is set to double by 2010.

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