Gene Munster, managing director at Piper Jaffray, spoke with CNBC's "Squawk on the Street" on Thursday, hours before a Facebook announcement in which it is expected to roll out a new version of its news feed to include upgraded videos, photos and potentially enhanced advertising.
"If you look at the bigger picture of what's going on here, [Facebook is] coming out with more ads, more types of ads, which down the road moves the needle, because that's still investors' nagging question—how do they monetize the massive engagement they have," said Munster, whose firm holds a $38 price target on Facebook with an "overweight" rating.
Munster expects that Facebook will disproportionately discuss the updated features on the desktop platform in its announcement Thursday. Instead, he said, they it should be focusing on the mobile products. "At the end of the day, that's where engagement is coming from and that number is only going up," he said. "I'm interested (in) how they're going to take this revamped news feed and improve mobile monetization."
However, in the short term, Munster said, Facebook is a better investment than Google. "If you look over the next year, Facebook is a better opportunity because they are adding new ad units like the news feed today."
"I think over the long term, over the next five-10 years, Google is a much more reliable play. If you're looking for more aggressive money, I'd own Facebook. The safer money goes with Google," he said. "The probability that Facebook is going to grow at 30 percent plus, they should trade at a higher multiple than Google just because they're growing much faster. The numbers are working in Facebook's favor here."
"I would never bet against Google in the long term," he said, adding that Facebook has room to prove their critics wrong, while with so many bullish calls on Google, this optimism "takes away some of the near-term upside." Munster's firm holds a $915 price target on Google, which is also at a premium from the current trading levels.