Pro: Why Alphabet Is A Better Pick Than Facebook

Shares of Facebook, Inc. FB hit a new all-time high Wednesday and Alphabet Inc. GOOG GOOGL's stock isn't far removed from its own peak. But if investors had to choose between the two stocks, they should consider Alphabet, according to Dan Niles.

The Expert

Niles, a founding partner at AlphaOne Capital Partners, discussed the Facebook vs. Alphabet debate Wednesday on CNBC.

The Thesis

Facebook remains in "pretty good shape" in the long run given the large number of social media users who are not monetized today or not monetized very well, Niles said. Facebook is making "no money" off the more than 1 billion WhatsApp users, and the 1.3 billion Messenger users are "barely" monetized, he said.

Expectations for Facebook have risen ahead of Wednesday's earnings report, he said. In addition, the company faces risk from currency factors and management's prior guidance of expense growth in the 50-60 percent range, above the Street estimate of 47 percent.

In contrast, Alphabet exited its second-quarter report with strong performance, and in doing so may have pushed the bar higher for Facebook, Niles said.

"We like Google better," he said. "That's our favorite in the internet space right now."