I Asked Grok Whether the Stock Market Will Go Down in 2025: Here’s What It Said

Thus far, 2025 has been a year of considerable stock market whiplash, with the S&P 500 sinking 10% in two days in early April on the heels of President Donald Trump’s tariff announcements, only to reach one of its best days in history a few days later, when the president said he’d pause said tariffs.

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To try to get a handle on how the market might perform for the rest of the year, GOBankingRates asked Grok, the Elon Musk-backed artificial intelligence (AI) chatbot, for some answers about whether a market crash is on the horizon. Here’s what it said.

Also see how to protect your money from a stock market crash at every age.

The AI assistant called predicting how the stock market will perform in the second half of 2025 “inherently uncertain,” pointing to economic, political and global volatility as a reason it couldn’t commit one way or another. Instead, it offered arguments for why the stock market might move in either direction.

Here’s what it had to say about why the market could fall.

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Quoting analysis by EBC Financial Group, Grok noted that the Shiller CAPE ratio — the metric used by financial experts to determine whether markets are undervalued or overvalued — for U.S. equities is in the high 30s.

According to EBC, that level is historically associated with lower forward returns. The result could be a market correction.

Pointing to weakened consumer spending, a cooling labor market and the potential of a trade war, Grok noted there is potential for a recession that might halt a market rally.

While Grok cited old data from December 2024, Fitch Ratings’ August 2025 analysis confirms that consumer spending was down in the first half of the year. It also cited trade uncertainty and a cooling labor market.

Grok pointed to the uncertainty of the Federal Reserve’s monetary policy, particularly around interest rates, as a potential cause for stock market underperformance — especially if the Fed refuses to cut rates, which it says could put pressure on equities.

However, Fed Chair Jerome Powell has hinted at possible rate cuts, CNN reported.

Noting that tech companies like Nvidia have an outsize percentage of the value of the current S&P 500 — Nvidia alone accounts for nearly 7% of the S&P’s total value as of Sept. 5 — Grok said the market could suffer if the AI-driven rally starts to lose momentum.

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On the other hand, the AI provided several reasons that the market might hold up for the rest of 2025.

Again, pointing to outdated 2024 data, Grok said the majority of Wall Street analysts were optimistic — at least as of last December — with many anticipating a rally based on strong expected corporate earnings. However, outside of Grok, some analysts are offering a more nuanced view.

An August 2025 analysis by Morgan Stanley, for example, noted that while 80% of companies have reported second quarter earnings above the consensus estimate, there are performance gaps between sectors that point to corporate earnings being weaker than they appear.

Citing a roundup from TheStreet, Grok pondered whether incoming tax cuts and other business-friendly policies baked into the One Big Beautiful Bill Act could be a catalyst for growth and boost corporate profits and investor sentiment.

While some fear AI hype, others see upside. Grok cited a December 2024 analysis from Goldman Sachs predicting that AI monetization could expand beyond megacap tech into software and services, broadening market gains. But more recent commentary has been more cautious.

In August 2025, even OpenAI CEO Sam Altman reportedly warned that the AI market shows signs of being in a bubble, according to The Verge, with investor enthusiasm potentially outstripping real economic payoff. That tension makes the sector both a driver of optimism and a possible source of risk.

Rate cuts expected later in 2025 may serve as a backstop, easing financial conditions and supporting equities.

So will the stock market go down in 2025? Even Grok refused to commit, highlighting credible risks — high valuations, consumer weakness and Fed uncertainty — but also strong tailwinds, from policy support to resilient earnings.

Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.