INTERNET BUBBLE IN TROUBLE? ANALYSTS WARNING OF A STEEP DECLINE.

Byline: Edward Wyatt and David Barboza The New York Times

George Nichols, a 22-year-old management major at the Georgia Institute of Technology, put more than $1,500 of his student loan money in a mutual fund investing exclusively in highflying Internet stocks.

Shalin Madan, 23, left his job as an accountant at State Street Bank in San Francisco to become a full-time day trader, moving his money frantically in and out of stocks like America Online, Amazon.com and Yahoo! - often every few minutes.

As such delirium has spread, Internet stocks have soared. Shares of newly public companies like Marketwatch.com and Theglobe.com have risen threefold or fourfold in a day; more established companies like Yahoo! or Amazon.com have more than doubled in the past three months. Marketwatch.com now sports a market value of nearly $950 million - bigger than such established companies as Reebok, Polaroid and Tupperware.

But this week, a bit of the air leaked out of what many Wall Street pros call the Internet bubble, with some highfliers, like Amazon.com and America Online, falling sharply from recent highs. And while most of the stocks are still ahead for the year, many analysts are warning of a steep decline that could rattle the wider market.

That is because Net fever has spread in recent months to technology companies and an even broader swath of the market. And it leaves investors in 401(k) plans and mutual funds who have not bought into companies with ``dot com'' after their names increasingly vulnerable.

The latest warning about an Internet sell-off comes from Barton Biggs, a Morgan Stanley strategist who has been bearish on the market for some time. ``I promise you, like all bubbles, this bubble will come to a very bad end,'' he said Thursday.

If it does, it is not just Amazon.com and Broadcast.com that will suffer. Pension and fund managers who are worried about the high prices of Internet stocks or who are having trouble buying large stakes in these small companies have driven up the stock prices of companies like Cisco Systems, which builds equipment that connects computers to the Net, and Oracle, whose database software is used by many online retailers.

Even more cautious fund managers have turned to companies like Walt Disney, CBS and Sotheby's that have only the most tangential connections to the Net. When Disney debuted its Internet joint venture, Go Network, earlier this month, investors bid up Disney's market value by $5.6 billion.

While valuations of Internet stocks remain in the stratosphere, those of technology stocks have doubled in the past three months. And those of broad market indicators like the Standard & Poor's 500 stock index have leapt by 50 percent.

The prices of Internet stocks have risen so high so fast that even analysts enthusiastic about the Net's long-term effect on the economy have warned that prices in the entire sector are likely to fall more than 50 percent.

A sharp, widespread decline would cause headaches for regulators and could cause problems for many online investors, who dominate the trading in many Internet stocks. Already, a group of senior officials from several big Nasdaq trading firms has met to discuss recent volatility among Net stocks, virtually all of which trade on the Nasdaq stock market.

Several brokerage firms have acted to squelch speculative trading by restricting online transactions. Among other things, they have made it more difficult to borrow to buy Internet stocks and put certain limitations on initial public offerings.

Richard Hoey, chief economist at Dreyfus Corp., recalls that a similar frenzy for computer stocks emerged in the summer of 1983, about the time the personal computer was introduced. But few of the favorites then - like Prime Computer and Coleco - are around today.