Google is now the fifth biggest company in the US, based on its market capitalisation. The search firm’s share price passed $700 (£336) last week, which means the business is more highly valued than Ford, General Motors, IBM, Bank of America, Boeing and a host of other household names that ring up a great deal more in sales than Google and turn in a greater profit.

And when Microsoft paid $240m (£115m) for a 1.6 per cent stake in Facebook last month, the social networking site was valued at $15bn (£7.2bn).

With comparisons being drawn with the ludicrous company valuations that led to the huge dot com bust six years ago, influential voices are now asking the question: is a new dot com bubble starting to appear?

The question could hardly come at a worse time.

The financial markets in London and New York are in a state of high caution. In the UK, the knock-on effects of the run on Northern Rock are still being felt, and banks are worried that other companies in the sector are teetering on the brink.

In the US, a second drop in interest rates came in response to fears of an inflation-led recession as the sub-prime mortgage crisis continues to cause shockwaves across Wall Street.

Unlike the dot com era, the technology companies in question can hardly be blamed for their current valuations.

Google has historically been almost anti-Wall Street, reluctant to offer guidance on its future sales and leaving financial analysts to make guesses about fiscal performance ­ and hence to send the share price spiralling upwards in unbounded optimism. Facebook is a private company and doesn’t publish its results. A little bit of mystery is clearly not a bad thing.

Share price valuations aren’t, in reality, that different from gambling odds. Financial experts making a bet on the future of a company go through much the same analysis as a punter poring over Sporting Life.

Ultimately, nobody really knows the answers. But the after-effects of a bad share punt are more significant than the result of the 3.15 at Kempton Park.

It doesn’t actually matter if Google or Facebook are worth these apparently daft valuations. What matters is the underlying state of the financial markets. A balloon can safely fly as high as it likes, provided it doesn’t hit bad weather.

Any company that can acquire customers as rapidly as Google and Facebook has a business model worth investing in. But those investors have a long way to fall if the rain clouds form ­ and the danger is that the IT sector will again be caught up in the storm.

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