Do Soaring Interest Rates Even Matter For Non-profitable Tech Companies

Until today's mini rout, traders were starting to wonder if anything they learned in Finance 101 even mattered anymore: after all, one of the core tenets of modern finance and monetary theory is that higher rates make (unprofitable) tech stocks less valuable due to the higher discount factor that one must apply on their (eventual) future cash flows as well as the terminal value (if any). And yet, with 2Y yields higher rising to the highest level since June 2007, the recent surge in non-profitable tech companies is quite  eyebrow raising.

As Goldman trader Louis Miller notes, the bank's nonprofitable tech basket basket (GSXUNPTC Index) is up 26% since early May vs the S&P 500 Ex Top 7 (GSCMSPY7 Index) as high beta stocks and tech stocks have soared thanks to the ridiculous AI euphoria. This has also happened with 10Y real rates rising, but now that they are back through 2022 highs, is the peak hawkishness narrative going to stay with us given stronger data and higher rates?