Google Inc.'s (GOOG) third-quarter earnings rose 27% as the Internet company provided further evidence of an awakening economy by reporting that consumers clicked on more search ads and that advertisers were paying more to place their ads.

"While there is a lot of uncertainty about the pace of economic recovery, we believe the worst of the recession is behind us and now feel confident about investing heavily in our future," Google Chief Executive Eric Schmidt said.

Quarterly results from the Mountain View, Calif, surpassed Wall Street expectations and lifted the stock - already up 72% year to date - another 2.9% in after-hours trading to $544.55. The stock hit a 52-week high earlier Thursday at $536.90.

Colin Gillis, analyst at Brigantine Advisors, called the results "fantastic."

"That’s the kind of quarter the bulls wanted. We know they have been reducing costs, now we're seeing them grow the bottom line," Gillis said.

For the quarter ended Sept. 30, Google reported earnings of $1.64 billion, or $5.13 a share, up from $1.29 billion, or $4.06 a share, a year ago. Excluding stock-based compensation, the figure rose to $5.89, beating the average analyst estimate of $5.42 on Thomson Reuters.

Revenue rose 7.3% to $5.94 billion. Excluding traffic-acquisition costs, or the commissions paid to marketing partners, which totaled 27% of advertising revenue, revenue was $4.38 billion, above the Thomson Reuters estimate of $4.24 billion.

Piper Jaffray analyst Gene Munster said revenue growth of 7% topped even the most optimistic whisper numbers, which pointed to 5%-6% revenue growth.

Google's U.S. paid clicks - a measure of how frequently consumers clicked on its ads - surged 14% from a year earlier and were up 4% from the second quarter. Paid clicks had been pressured lately by the economy, falling 2% sequentially in the second quarter.

Costs per click, or the amount an advertiser pays each time a user clicks on an ad, fell 6% from a year earlier but rose 5% from the previous quarter.

The analysts said the sequential increase in cost per clicks was a signal that the economy is rebounding.

-By Scott Morrison, Dow Jones Newswires; 415-765-6118; scott.morrison@dowjones.com

(Jay Miller contributed to this report.)