Things at Twitter are looking "less worse," with major app updates and a soaring stock price, but sustained growth in the face of Facebook and Google is unlikely, according to RBC Capital Markets internet analyst Mark Mahaney.

Twitter is up 40 percent in the last three months, topping an $18 billion market cap — a valuation that Mahaney said implies shareholders are expecting the company to do "a lot more, a lot better than just get less worse."

The recent stock rally, he said, is based on the assumption that Twitter can start "eking out growth" in ad revenue in 2018, reversing year-over-year declines.

"That's very hard to do in an ecosystem where most of the ad dollars are going to two names: Google and Facebook," he told CNBC's "Squawk on the Street" Tuesday.

Relative newcomers to the space, Snapchat and Twitter have yet to prove return on investment for advertisers, consistently losing out to incumbents Facebook and Google.

And in three to six months, shares of Twitter will again reflect that, Mahaney said.

"At some point there's going to be a correction in the stock if that recovery in the ad revenue growth doesn't get to strong double digits," he said. "I don't think it's going to get there."

A Twitter spokesman said the company does not comment on stock movement.