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Markets are ushering in a particularly gothic Halloween as the AI trade exposes a crumbling aristocratic pile of early 21st century capitalism. Wall Street has been describing itself in castle-adjacent terms for years.<\/p>\n
Jamie Dimon has long talked to JPMorgan shareholders about the bank\u2019s \u201cfortress balance sheet.\u201d His 2015 letter set aside a section to answer the question of what the phrase even meant. By 2021, he\u2019d added a second castle word, warning that \u201cthe moats that protect this company are not particularly deep.\u201d<\/p>\n
The moat came from Warren Buffett. In a 1999 Fortune article with Carol Loomis, he argued that the key to investing is a company\u2019s competitive advantage and how durable it is, and that the businesses worth owning have wide moats around them.<\/p>\n
The gothic novel\u2019s favorite picture of danger is a castle falling apart, and for about 250 years the two have traded images: the castle and the moat, the vampire, the creature built in a lab. This Halloween season has them rushing to the front of the conversation, with a two-day rout in tech stocks on Thursday and Friday turning on whether the AI giants\u2019 moats will hold, as gothic horror booms on bookshelves and movie screens. <\/p>\n
Horror took 15.5% of the domestic box office in 2025, according to The Numbers, and U.S. horror book sales rose 7% through the first nine months of 2025, per Circana BookScan, while adult fiction overall grew just 1%. The New York Times asked Friday why every book is gothic now, with publishers putting the label on everything from family sagas to space operas, and several film critics commenting that Nathan Fielder\u2019s smash-hit business-scandal documentaryYou Can See Everything is a twisted, even gothic romance in the tradition of Alfred Hitchcock.<\/p>\n
The moats get tested<\/p>\n
The selling started with Alphabet. The stock fell 12.6% Thursday, wiping out roughly half a trillion dollars in market value, after the Google parent\u2019s quarterly report. Revenue from the core search unit fell short, partly because of the popularity of less-profitable \u201cAI mode\u201d searches and the company burning cash faster than expected. Its free cash flow came in at negative $9.1 billion, against the negative $2.23 billion analysts expected, per FactSet. <\/p>\n
The S&P 500\u2019s worst performer was software giant ServiceNow, which dropped 27% the same day on slowing revenue growth and disappointing guidance. By Friday morning, it was Amazon\u2019s and Intel\u2019s turn, with Intel down roughly 25% before the opening bell. Big Tech lost nearly $900 billion in market value after another sharp rise in AI spending in the third quarter, the Financial Times calculated. Reddit, whose shares fell more than 22% premarket Friday, is pulling up the drawbridge: it\u2019s moving to a logged-in experience as AI eats search.<\/p>\n
The irony is spooking investors. AI is eating into the businesses that throw off the cash, and the cash is going into AI anyway. The hyperscalers have raised $326 billion in stock and bonds this year to pay for the build-out, more than triple 2025, according to S&P Global Market Intelligence data.<\/p>\n
The question underneath it is the one Apollo chief economist Torsten Slok put to clients the morning Alphabet fell. \u201cWith AI disruption potentially around the corner, there is a lot of discussion about moats at the moment,\u201d he wrote in his Daily Spark note Thursday. <\/p>\n
He built on finance professor Aswath Damodaran, the \u201cdean of valuation,\u201d who compiled a list of sources of competitive advantage, including brand strength, switching costs, network effects, cost advantages and legal protection. Then he boiled it down to an AI moat checklist of three questions: does the company own data its rivals can\u2019t get, is its product part of how customers do their jobs every day, and can it charge more without customers walking away?<\/p>\n
Judging by that third test, the companies selling AI don\u2019t seem to measure up. OpenAI\u2019s new GPT-6.1 Terra model costs up to half as much per token as the version before it. An index from expense-management firm Ramp, which looked at what companies actually pay Anthropic and OpenAI, shows token prices down roughly 35% since the end of June, in what Axios called a price war.<\/p>\n
The companies paying for AI aren\u2019t getting much back yet, either. In an Oct. 24 note, Slok sent a tremor through Wall Street terminals with an argument that AI \u201chas delivered zero financial payoff to corporate America outside of tech.\u201d Revenue per worker and profit margins are rising for the Magnificent Seven and flat for the rest of the S&P 500, he noted, and mainstream companies are starting to treat token spending as a cost center that weighs on margins rather than a source of growth.<\/p>\n
The first castle was a fake<\/p>\n
Xavier Aldana Reyes, a researcher at the Manchester Centre for Gothic Studies, told the Times that interest in the gothic tends to surge during periods of social anxiety and political turmoil. Literary agent Mary C. Moore put the genre\u2019s subject more bluntly, telling the paper that \u201cGothics are all about exposing what is rotten at the core of something shiny\/wealthy.\u201d<\/p>\n
The genre was invented by a scion of wealth who knew the old order from inside and drew a salary without working at all. Horace Walpole was the son of UK Prime Minister Robert Walpole, and hisThe Castle of Otranto, published in 1764, is generally regarded as the first gothic novel.\u00a0<\/p>\n
He passed it off as a translation of an obscure Italian work, found in the library of an old Catholic family in northern England and printed at Naples in 1529. But it was really his dramatization of the aristocratic system being usurped by the \u201cgreedy\u201d new bourgeoisie, per a 2014 paper by \u00c7ankaya University\u2019s Ertu\u011frul Ko\u00e7 and Neslihan Atcan Altan. The literary historian Robert Miles has written that the modern novel itself was understood to have been revolutionized by print technology, which made the circulating library possible, and explains Walpole\u2019s pre-modern faux origin story.<\/p>\n
We all know which gothic tales came next. In her 1831 introduction to Frankenstein, Mary Shelley said the idea came to her in June 1816 after she overheard Lord Byron and Percy Shelley discussing galvanic experiments. A 2018 piece republished by Live Science made the comparison directly: electrical life stirred up the same range of arguments then that AI does now.<\/p>\n
Karl Marx made the trade official. In Capital, in 1867, he wrote that capital is \u201cdead labour, that, vampire-like, only lives by sucking living labour,\u201d an image that turns up across 30 years of his writing. Bram Stoker\u2019s Dracula created the great modern vampire myth in 1897, landing as a depression in agriculture threatened the fortunes and estates of Britain\u2019s noblemen, even as a cheap agricultural products flooded in from booming American farms.<\/p>\n
The literary critic Franco Moretti read the count as a businessman. In a 1982 essay in New Left Review, he described Stoker\u2019s Dracula as a rational entrepreneur who invests his gold to expand his dominion and conquer the City of London.<\/p>\n
The undead on Wall Street<\/p>\n
In more recent times, Matt Taibbi\u2019s 2009 Rolling Stone story \u201cThe Great American Bubble Machine\u201d called Goldman Sachs \u201ca great vampire squid wrapped around the face of humanity.\u201d The line stuck well enough that then-Goldman CEO Lloyd Blankfein conceded in August of that year that the article had \u201ctapped into something.\u201d<\/p>\n
Economists got their own monster: zombie firms. Bank for International Settlements researchers Ryan Banerjee and Boris Hofmann define them as companies at least 10 years old whose earnings haven\u2019t covered their interest payments for three straight years. Across 14 advanced economies, the zombie share of listed non-financial companies rose from 4% in the late 1980s to 15% in 2017. The researchers found that weak banks that roll over loans instead of writing them off keep zombie companies on life support, and that lower interest rates tend to push the zombie share up.<\/p>\n
The newest candidates are in software. PitchBook counted $131 billion of leveraged loans priced below 80 cents on the dollar, a common threshold for distress and the most since May 2020. Software companies account for 32% of those distressed loans while making up just 12% of the index, and 84% of stressed software companies are backed by private equity. These are castles that can\u2019t pay their own upkeep, kept standing by somebody else\u2019s money, the dollar-princess arrangement with a credit line instead of a dowry.<\/p>\n
The anxiety is big business for the haunted boom of 2026. Book publisher Zando launched a horror imprint, Evil Twin, planning six to eight titles a year. In Hollywood, Warner Bros.\u2019 R-rated body-horror film Clayface opened No. 1 the weekend of Oct. 23 with about $24 million, according to The Numbers. <\/p>\n
The machines are writing the stuff now, too. Inkfluence AI, a fiction-writing platform, says 3,929 horror books were started on it in the 180 days to Sept. 12, with haunted-house and ghost premises leading at about a third.<\/p>\n
Generative AI was used for research assistance and\/or transcription of this article. The reporter independently reported and verified the factual claims in this article, and a human editor reviewed it before publication.<\/p>\n
#Marxs #vampire #Buffetts #moat #gothic #castle #Wall #Streets #favorite #metaphor<\/p>\n","protected":false},"excerpt":{"rendered":"
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