How are the tariffs affecting tech earnings?

CGTN Euope interviewed Rob Kniaz, founding partner of H-Tree Capital

Transcript

00:00Now, Rob Nies is the founder of H-Tree Capital, a London-based venture capital firm.

00:06Rob, these are fantastic results. They beat expectations. What has driven them?

00:11I think it's been a two-pronged thing. It's been the rise of AI in general has helped all of the

00:16cloud companies in terms of getting spending into the cloud, increasing customer spend,

00:21and the ads market's been particularly strong. So any of these companies with an ad business has

00:26done quite well, both in terms of absolute spending as well as the dollar slightly weakening.

00:30It's interesting that ad sales situation because Metro, of course, changed its content moderation.

00:37A lot of criticism around that at the time. Clearly, it didn't put off advertisers.

00:43I think it's such a big platform. Advertisers can't afford to not be on it. I think no matter

00:47what they do, there's still going to be a draw because that's where the eyeballs are at.

00:52This AI investment, does it show that Zuckerberg's investments are paying off? Is he leading the

00:58pack regarding AI at the moment? I would say Microsoft is probably, in revenues,

01:04leading the pack in terms of cloud services. Google is running around behind them. Facebook is playing

01:09a slightly different game because they're not business-to-business focused. They're consumer

01:13focused. So I think they're both, Microsoft and Meta, are leading the pack in their own way.

01:17But really, it's still so much of a wide space right now that everyone's figuring out how to layer in AI

01:23at every different layer along the stack. So I think we'll continue to see a lot of innovation

01:26of people figuring out new areas to plug it in.

01:29We're getting results from two other members of the Magnificent Seven a little bit later,

01:34Apple and Alphabet. Are your expectations high for them as well?

01:37I think Apple's the real wild card here because hardware is much different than software. And

01:44frankly, Apple is the least exposed to business users compared to Microsoft. So I think Apple,

01:50I predict, will be people buying ahead of tariffs or in anticipation of tariffs. But

01:55this may be their last good quarter for a while. But I suspect they're going to have the most

02:00difficulty because they're really at the eye of the storm. Alphabet, I think, will track everything

02:04else well. Do you think these strong results show that the impact of the U.S. trade tariffs

02:11are not going to be too bad for the tech sector? Or is it still too much in flux?

02:18I think it's too early to say because, frankly, I mean, these are bound to the entire economy now.

02:22These companies are so prevalent. Maybe they're more of a lagging indicator of the economy. People

02:27cut that spending. So I don't think they're immune necessarily. If you look at downturns in 08,

02:32they were affected. But they're probably less in the direct immediate front line of fire. So

02:38it may be weeks or months. So basically the effect. But I think it will trickle down into

02:43ad spending and business spending if businesses cut CapEx. All right. Thank you so much.

02:48Really appreciate your views there. That's Rob Nise, founder of H3 Capital,

02:51a London-based venture capital firm.