0:00 On Thursday, Nvidia lost more than four hundred billion dollars in a single morning, and it hadn't done anything wrong. Nobody had. No bank failed. No law passed. The economy looked fine. The S&P five hundred still lost more than two trillion dollars by midmorning. And the Nasdaq needed just six minutes to give back a rally that was one day old. So why did the stock market just crash? And was this the AI bubble popping? Best day after a midterm since nineteen eighty-two! Does this come with a receipt? The short answer is an election, six hundred thousand chips stuck in Hong Kong, and some very rich people locking in a very good year. The long answer starts a month earlier, on the sixth of October, in Santa Clara,
0:47 California. That day, Nvidia closed at the highest price it had ever had. A month before, it was worth about five point four trillion dollars, roughly eight cents of every dollar in the whole S&P five hundred. If you own a plain index fund, the safe, boring kind everyone recommends, you own a lot of Nvidia. Add the rest of the Magnificent Seven, Apple, Microsoft, Amazon, Alphabet, Meta and Tesla, and about thirty-five dollars of every hundred in that fund sits on seven companies. I'm diversified. Five hundred companies. Seven of them are a third of the pie. ...That is a big slice. Even at the dot-com peak, the market wasn't this lopsided.
1:34 And most of those giants are betting on the same thing. That bet is expensive. This year, the four biggest cloud companies plan to spend over seven hundred billion dollars building data centers. Next year, more than a trillion. The biggest line on that shopping list says Nvidia, whose last quarter brought in ninety-six billion dollars, more than double the year before. By late October, investors were staring at four cracks. Crack one: the money goes in a circle. Nvidia invests in its own customers, the AI labs and chip-rental firms that then buy Nvidia chips. It owns a stake in CoreWeave, which rents those chips out, and agreed to buy up to six point three billion dollars of the computing power
2:21 CoreWeave can't sell. Nvidia's own finance chief knows how that sounds: "we know some will call this circular financing." Here's a few billion dollars. Wow! What should I spend it on? Funny you should ask. Crack two: the chips are the collateral. Firms like CoreWeave borrowed huge sums to buy chips, rented them out, and pledged those same chips to borrow more. At one point CoreWeave owed over five dollars for every dollar of equity. Fine, while a used chip holds its value. But Nvidia brings out a new generation every year or two, and each one makes the last one worth less. And Michael Burry, who called the housing crash, says the giants book their servers as lasting longer than they do, which flatters profits.
3:07 The nightmare: one borrower misses one payment, the lender grabs the chips to sell, and everyone learns that afternoon what a used AI chip is worth in a hurry. It hasn't happened. But every chip investor has thought about it. Crack three: who's paying. By the end of July, Nvidia was owed about sixty-three billion dollars for chips it had shipped but not been paid for yet. And this year, just three buyers made up more than two fifths of its sales. Picture a restaurant where three tables order two of every five plates, and a lot of the food goes on a tab. Crack four: the plug. You can buy a chip. You can't buy electricity that doesn't exist. In northern Virginia, the data-center capital of the world, the wait to hook a new building up to the grid had stretched to about seven years.
3:56 And the power that does exist, somebody pays for. On America's biggest grid, across thirteen states, power plants get paid just to stand ready, and families cover that in their bills. Then the data centers piled in. Households there were paying an estimated twenty-five to thirty dollars a month more than in twenty twenty-four, and the grid's own watchdog blamed data centers first. Why is the electric bill up again? Hi neighbor! Nobody reads a spending report. Everybody reads their power bill. Hold that thought. Wall Street had its own bad news. On October twenty-ninth, Google had its worst trading day ever. The next day Intel fell by a quarter, chip stocks slid into a bear market, and Apple, the boring one, passed Nvidia in value.
4:44 By the second of November, the forty-seven biggest AI and chip stocks had lost about five trillion dollars since the top. That's about what the whole dot-com crash wiped out, and that took two and a half years. This took four weeks. Then came the election. Tuesday, the third of November. Democrats won the House. Then they won the Senate. Further down the ballot, in ten states, there were forty-one local votes on data centers. Voters went against them in forty. Twenty-one of those were in Ohio. The one town that said yes was Harwood, North Dakota. Ohio no. Ohio... Hi! Yes! Over here!
5:30 That's the power bill, showing up at the ballot box. In Ohio, Sherrod Brown beat Jon Husted, who'd been called "the face of data centers." In Texas, Elon Musk, the cycle's biggest donor with at least four hundred and seventy-four million dollars, lost both big races. His reaction: Data centers in space looking pretty appealing right now. Here's why a town vote moves Wall Street. A data center needs land, power and a permit, and all three are local. Goldman Sachs figured moratoriums like these could hit about forty-five percent of America's planned data-center expansion. And the bigger fear was Washington. For years, AI was mostly left alone to build. Now a Democratic Congress, elected the same night voters said no to data centers,
6:18 might want rules on where data centers go, who pays for their power, and how fast the build-out runs. One congressman, Robert Garcia, had two words for AI executives: "Lawyer up." So. Data centers. We were just leaving. No rule has passed. Not one. It was the fear of a rule that did the selling. That trillion-dollar shopping list had picked up some small print: if they let us build it. And on Wednesday, Wall Street partied anyway. The Dow jumped fifteen hundred and sixty-nine points, about three percent, its best day after a midterm since nineteen eighty-two, and oil fell more than nine percent. Traders loved the cheap oil.
7:04 They hadn't gotten to the new Congress yet. The party lasted one day. That morning, Vice President JD Vance had posted on X. The reason we lost is the war. The war with Iran. That raised hopes of a deal, and oil fell. By Thursday morning, traders doubted it, and oil climbed again. Then, before the opening bell, Reuters dropped the next problem. About six hundred thousand of Nvidia's H200 chips were sitting in Hong Kong, waiting for Beijing to let them in. Washington had cleared the sales last winter, case by case, with a twenty-five percent tariff. In August, Beijing let companies use them in Hong Kong. Into mainland China, in bulk? Still waiting. You said we can sell them!
7:50 You can. Twenty-five percent, please. They're in Hong Kong! Can they come in? Not yet. The strange part: Nvidia had already taken a four hundred million dollar hit on H200s that nobody bought. And the ones that did have buyers couldn't get through the door. Nine thirty. The bell rings in New York. It takes the Nasdaq six minutes to give back the whole rally. So much for Wednesday. Ten thirty-five. The Nasdaq is down four percent and the Dow seven hundred points. Across the S&P five hundred, more than two trillion dollars has vanished, and more than four hundred billion of it is Nvidia alone. That's about twice Amazon's entire building budget for the year.
8:35 Eleven seventeen. The VIX, Wall Street's fear gauge, is up sixty-five percent. Think of it as the price of crash insurance, and everybody wants some. Eleven thirty-seven. The Dow is on track for its worst second day after a midterm in records going back to eighteen ninety-six. One thirty-eight. AMD's boss, Lisa Su, speaks up, with her stock down fifteen percent. I think the market can sometimes be a little bit short-sighted. Aaaaah! Two fifty-eight. And this is where ordinary people come in. Maybe you're at work, checking your phone under the desk. You own a plain S&P five hundred fund. If it holds a quarter of a million dollars, Nvidia alone took about nine hundred and ninety dollars out of it that morning.
9:23 By now, small investors have sold, on net, three hundred and fifty-eight million dollars of stock, the most since March twenty twenty. Buy the dip... ...or sell the dip? Viraj Patel at Vanda Research called it "a total capitulation by retail investors," with "no signs of buying the dip." Three oh six. Charlie McElligott, a strategist at Nomura, explains who's really selling. They're shooting the generals. The generals are the year's biggest winners. Hedge funds had made a fortune in twenty twenty-six, and with two months to go, they sold the winners to lock it in. Computer-driven funds and funds on borrowed money were forced to sell too. And nobody stepped in to buy. Great year.
10:08 Let's bank it. Sell the winners. Which ones? Yes. Single-name stock moves are absolutely BONKERS. Four o'clock. The closing bell. The Dow lost eighteen hundred and thirty-three points. The S&P fell over four percent. The Nasdaq fell five and a half, its biggest drop in nineteen months, and is now in a correction, at least ten percent below its high. Chip stocks had their worst day since March twenty twenty. Nvidia closed at a hundred and eighty-one dollars, down more than nine percent. And while everything burned, AppLovin rose almost thirty percent, and Goldman Sachs picked that day to name a hundred and nine new partners, its biggest class since twenty ten.
10:55 Honestly? Great day to get promoted. It's easy to think a crash like this only hurts rich people. It doesn't. Around seventy million Americans save in a 401(k), mostly through the same index funds, and the pensions of teachers and firefighters hold them too. When the seven giants fall, they fall too. It goes deeper than stocks. Data centers run on borrowed money, much of it raised from insurers and pension funds. Pimco bought a big piece of the bonds for Meta's giant Louisiana data center with savers' money, and Washington has moved to open 401(k)s to this kind of lending. So your retirement may be quietly lending to a half-built building. And some get hit without owning a share: the electricians,
11:40 some making two hundred and sixty thousand dollars a year on data-center jobs, and the diners that feed them. Thursday didn't stop that work. But if the spending stops, it lands there first. If you're twenty-five, Thursday was a sale. If you're sixty-two and retiring in the spring, it was a very long day. So who do you get angry at? Every crash wants a villain. Twenty oh eight had the banks. Thursday doesn't really have one. I just didn't want the bill. I just wanted to keep my good year. I just said not yet. I just sold chips! Every one of those choices made sense on its own. They just all landed on the same morning. So here's why the stock market crashed.
12:26 A market that's one-third AI had been sliding for a month. Then, in three days, voters elected a Congress that might rein in data centers, Beijing left six hundred thousand chips at the door, and funds sitting on a great year cashed out. Nothing broke. The fear did it. It isn't new, either. In the eighteen-forties, Britain went mad for railways, and at the peak it was pouring about seven percent of its economy into track. Railway shares lost nearly two thirds of their value, and a third or more of the approved lines never got built. But many of the lines that did get built are still part of Britain's railway today. Here's the catch. A railway can wait for its trains. A chip sitting in a dark building just gets older.
13:11 So, was Thursday the AI bubble popping? Not yet. Both tariff-crash days in April twenty twenty-five were bigger, and together erased a record six point six trillion dollars. Jobless claims were near their lowest since nineteen sixty-nine. And no rule had passed. Bernie Sanders called for a national moratorium on data centers. Americans don't want Big Tech oligarchs wrecking the environment... A call, not a bill. A bubble doesn't pop when prices fall. It pops when the money stops. On Thursday, the money hadn't stopped. Nvidia's sales were still doubling. The giants were still expected to spend more than a trillion dollars next year. But here's the part almost nobody noticed.
13:56 A week before the crash, one giant blinked. Microsoft cut its spending plan from a hundred and seventy-five billion dollars to a hundred and seventy. That's less than three percent. Tiny. But it's a foot moving toward the brake. And on Tuesday, the people who pay the electric bill elected a Congress that might want a say in where the buildings go. So Thursday wasn't the pop. It was the day the market noticed there's a pin, and that voters, Washington and Beijing all have a hand on it. Nvidia is now about a quarter below its October record. Its next report is due on the seventeenth of November, and the six hundred thousand chips are still in Hong Kong. The rally died in six minutes. What happens next gets decided much more slowly, by permits, power lines,
14:44 and an electric bill on a kitchen table in Ohio. On Thursday, Lisa Su said the market can be a little bit short-sighted. That afternoon, it might have been the furthest it had looked in months.
