Google shares closed at $539 Tuesday, down more than 3 percent for the day. And down 4.4 percent from last Friday’s close, when no one had any inkling Page wanted to drop $12.5 billion for a pile of patents and a hardware company.

Meanwhile Standard & Poor’s — yes, that Standard & Poor’s — has dropped the stock from a “buy” to a “sell.” Here’s analyst Scott Kessler’s note:

“After further consideration of GOOG’s plans announced yesterday to purchase Motorola Mobility, we see greater risk to the company and stock. We expect the transaction to be consummated next year, but later than early 2012, which GOOG indicated. Moreover, despite MMI’s extensive and valuable patent portfolio, we are not sure it will protect Android from IP issues. We also believe the purchase of MMI would negatively impact GOOG’s growth, margins and balance sheet. Based on revised DCF analysis, we are cutting our 12-month target price.”

Again, always dangerous to read too much into a short-term swing in any company’s stock. But today’s conventional wisdom (again! caveat emptor, etc.) is that Google has spooked Wall Street because it’s not really sure what Google is thinking here: Is it really just buying patent protection, which was the company’s message yesterday? Or is the big plan to create an integrated soup-to-nuts software/hardware mobile phone company, a la Apple?

The latter, Kara Swisher argues convincingly today. And if that’s the case, Page might mollify Wall Street simply by saying that out loud. If, you know, he cared about mollifying Wall Street.

The latest evidence for the rebound came Thursday, when Internet giant Google Inc. (GOOG) posted a 37 percent profit jump for the first quarter and chip maker Advanced Micro Devices Inc. (AMD) reported a 34 percent revenue increase to record levels. The results follow the strong showing of bellwether Intel Corp., (INTC) which Tuesday announced quarterly profit that nearly quadrupled on a 44 percent jump in sales.

The trio of results kicks off what is likely to be a strong earnings streak as tech spending by companies and consumers picks up. Next week, Apple Inc. (AAPL), Amazon.com Inc. (AMZN) and Microsoft Corp. (MSFT), among others, are slated to report quarterly results. Tech-research firm ISI Group projects that overall revenues from such companies will rise more than 10 percent for the first quarter, compared with a 16 percent decline a year earlier. Meanwhile, Standard & Poor’s forecasts a 79 percent increase in tech earnings for the quarter from year-ago levels.

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“Our downgrade is on valuation and our view of deteriorating fundamentals,” he writes. “Sales of video game software have been declining, and we expect further weakness given the lack of job creation in the U.S.”

He adds that game development costs are likely to keep rising, “as customers limit purchases to top-rated titles.”

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Wall Street seems convinced that the Pre is not a postscript for Palm (PALM), but the beginnings of its rebirth. A historic turning point worthy of a trading bacchanal. Indeed, expressing a “renewed confidence in Palm’s prospects, Standard & Poor’s raised its target price on the company to $4.50 from $2.50. “Pre uses a new operating system that allows for the merging of multiple data sources,” Standard & Poor’s analyst Todd Rosenbluth said in a research note. “While the new system has been in long-term development, we believe it could help to bring consumer and carrier interest back to PALM’s devices, which have been losing market share.”

Matt Hoffman of Cowen & Co. agreed. “We believe WebOS will immediately be competitive with the industry’s most advanced mobile platforms, including Apple’s OS X and Google’s Android,” he wrote in a research note to investors.

Other analysts, while similarly optimistic, tempered their enthusiasm with hardcore market realities.

“Palm’s challenge will be to steal at least some of the thunder from the heavyweight contenders in the smartphone market,” said Charlie Wolf of Needham & Co. “In our opinion, the Pre clearly outshines Windows Mobile and Google’s Android platform in their current iterations. But whether it can gain breathing room in an increasingly crowded market remains an open question, especially in view of the prospect that stunning new operating systems and smartphones will also debut during the year.”

“Palm came out with guns blazing,” he told RCR Wireless. “They met or exceeded expectations. This gives the company a sense of momentum and a return to confidence. Of course, the bigger question is how the device is marketed. Will it launch on time? Will AT&T Mobility and Verizon Wireless get on board? Sprint alone isn’t enough to save the day. The profitability impact at this point is unknown.”