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.

Jamie Dimon has long talked to JPMorgan shareholders about the bank’s “fortress balance sheet.” His 2015 letter set aside a section to answer the question of what the phrase even meant. By 2021, he’d added a second castle word, warning that “the moats that protect this company are not particularly deep.”

The moat came from Warren Buffett. In a 1999 Fortune article with Carol Loomis, he argued that the key to investing is a company’s competitive advantage and how durable it is, and that the businesses worth owning have wide moats around them.

The gothic novel’s 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’ moats will hold, as gothic horror booms on bookshelves and movie screens.

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’s smash-hit business-scandal documentaryYou Can See Everything is a twisted, even gothic romance in the tradition of Alfred Hitchcock.

The moats get tested

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’s quarterly report. Revenue from the core search unit fell short, partly because of the popularity of less-profitable “AI mode” 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.

The S&P 500’s 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’s and Intel’s 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. Nasdaq 100 companies lost more than $1 trillion in market value Friday alone. Reddit, whose shares fell more than 22% premarket Friday, is pulling up the drawbridge: it’s moving to a logged-in experience as AI eats search.

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.

The question underneath it is the one Apollo chief economist Torsten Slok put to clients the morning Alphabet fell. “With AI disruption potentially around the corner, there is a lot of discussion about moats at the moment,” he wrote in his Daily Spark note Thursday.

He built on finance professor Aswath Damodaran, the “dean of valuation,” 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’t get, is its product part of how customers do their jobs every day, and can it charge more without customers walking away?

Judging by that third test, the companies selling AI don’t seem to measure up. OpenAI’s 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.

The companies paying for AI aren’t getting much back yet, either. In an Oct. 24 note, Slok sent a tremor through Wall Street terminals with an argument that AI “has delivered zero financial payoff to corporate America outside of tech.” 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.

The first castle was a fake

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’s subject more bluntly, telling the paper that “Gothics are all about exposing what is rotten at the core of something shiny/wealthy.”

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. 

He passed it off as a translation of an obscure Italian work, found in the library of an old Catholic family in northern Eng