Internet stocks entered the new year on a roll, but quickly hit a wall as skittish investors and profit-takers drove down prices across a number of sectors. While results so far this year have been mixed, the market's mood has been uneasy and slightly downbeat.

But in the last week, a steady stream of positive earnings reports has lifted Internet stocks out of their post-holiday funk. According to numbers from internet.com's weekly e-mail newsletter, Internet StockTracker, all 12 sectors (comprising more than 310 stocks) posted average gains in trading for the week ended Wednesday.

Terayon Communications (TERN), a maker of cable modems for Internet access, logged the biggest gain this week, rising 70% to 107 1/16 through Wednesday. The company reported a tripling of revenue in the fourth quarter to $38.7 million and a pro forma net income of $1.2 million, along with a 206% increase in annual revenues. TERN also picked up a couple of upgrades from Wall Street analysts.

Supply chain management software vendor i2 Technologies' (ITWO) 40 percent gain was fueled in large part by surging Q4 revenues and a net profit of $15.4 million, or 17 cents per diluted share, compared to $3.5 million, or 4 cents per share in the year-ago quarter. ITWO also announced a 2-for-1 stock split.

A number of other Internet stocks have been boosted by favorable earnings reports in recent days, including Web content and communities network Go2Net (GNET); Web switch and server adapter vendor Alteon WebSystems (ATON); Tut Systems (TUTS), a maker of broadband access systems for multi-tenant buildings such as apartments and hotels; and caching software and search engine market leader Inktomi (INKT).

One of the few companies that hasn't benefited in the short-term from an impressive quarterly report was America Online (AOL), which once again met or exceeded analysts' expectations. AOL posted Q2 net income of $271 million on sales of $1.6 billion, results greeted with enthusiasm by most analysts.