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.
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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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