Because tech stocks tend to be growth stocks, i.e. most of their value (expected cash flows) derives from their high-growth period, not their steady state (their post-high-growth life period), they are more sensitive to changes in the cost of capital and this, interest rates.
More “mature” companies, i.e. companies that have reached steady state (low growth) are companies that no longer invest as much excess capital in their business because they cannot find (enough or big enough) capital projects to generate a positive return on their invested capital.
These companies tend to instead distribute excess returns as dividends. Once a company is known as a dividend-paying company, it’s very hard for it to go back to anything else, as the composition of their shareholders now represents entities that want dividend yield. That’s where, for example, buy-backs come in handy, as they’re perceived to be temporary measures. In other words, companies that still think they may find sufficient capital projects and don’t want to become steady dividend payers tend to often embark on buy-backs instead.
In sum, more nature (low growth) companies are less sensitive to interest rates because their stock prices derive from more predictable low-growth expectations, while tech stock prices as per their discounted cash flow value tend to still be driven by high-growth period expectations.
The reason why there are very large tech companies shows that the notion of “large” has, over the past few decades, decoupled from the notion of “mature”. The latter would more aptly be characterized as “driven by low growth expectations”. This is how you end up with an entire industry (tech) that hasn’t matured yet (of course, “mature” can mean different things outside of this context, which can create confusion).
1) Similar to how it costs wages, money actually costs something too & it needs a decent rate of return (no not interest). Someone investing can rather that cash elsewhere - especially since prices are up everywhere and its more profitable and there is less competition.
2) If interest rates go up, the machines/software etc need to work harder to basically exist (similar to how if the rent/food etc went up it costs more for a person to exist in a job so they need a higher wage)
3) If the machine isn't able to run profitably, it's basically laid off. With tech its just so cheap to make a machine that you lay off alot of them. Investors want their money back sooner so need more sure things and a better machine worker. If that side gig/moonshot takes 2 years to work, thats too much since the money can be put to better use somewhere else.
4) The valuations drop since the prospect of growth with the ability to invest in new machines decreases drastically. Google for example is forced to invest in 'sure' cashflow things such as fibre and google cloud infrastructure vs stuff that takes 5-10 years to make money if it even does (Nest? DeepMind?).
Think about it really hard. Maybe you've wanted to do a side gig - SaaS app or something. If Strawberries or whatever are in shortage and suddenly cost so much and makes way more money - why put your money in the SaaS app when you could somehow source Strawberries as the side gig?
1) higher interest rates can dampen growth
2) as fed fund rates rise, so does risk free rate and equities especially the pricey ones like tech have a tough time justifying their valuations.
And when you can get good returns from loans (high interest) stock gets relatively less attractive and hence the stock prices drop to match again the risk versus reward equilibrium (cheaper stock means less money invested means less risk for the same returns like dividend or stock growth)
This is why stock prices react almost immediately to interest rises.
The key investment calculus is always risk versus reward.
Secondary: the cost of doing business also goes up.