Although the stock market remains in a bullish trend despite short-term losses, concerns persist about the possibility of a crash in the coming months.
Indices such as the S&P 500 recently hit a new all-time high as some analysts anticipate continued growth, have highlighted the market’s strength.
However, relative to historical valuations, the current S&P 500 levels are seen as alarmingly high.
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Specifically, the stock market has recently hit the highest overvalued spot in history, which has often preceded a downturn.
Additionally, on February 21, the market experienced its worst trading day of 2025, wiping out almost $1 trillion in value. Given these factors, the pressing question remains: Is the stock market on the verge of a major correction?
Grok projects recession probability
To this end, Finbold turned to xAI’s most advanced artificial intelligence (AI) tool, Grok 3, for insights into the probability of a 2025 stock market crash.
First, the AI model outlined key factors that could lead to a downturn or sustained market stability.
Grok acknowledged that the U.S. economy remains resilient, with low unemployment and strong consumer spending providing a solid foundation for continued growth.
At the same time, the AI platform noted that inflation, though still above the Federal Reserve’s target, is projected to stabilize around 2.4%, a significant improvement from the soaring prices of recent years.
Despite these strengths, Grok 3 identified several risks that could spell trouble for the stock market. For instance, stubbornly high inflation could deter the Federal Reserve from cutting interest rates as aggressively as investors hope.
Notably, expectations suggest that the Federal Reserve might implement two quarter-point rate cuts in 2025, which may not be sufficient to ease financial conditions.
Additionally, Grok noted that the stock market has been riding high, and a mean-reversion drop of 20% is plausible even without an outright recession.
Meanwhile, rising government debt and potential trade disruptions—such as tariffs from a second Donald Trump administration—could inject fresh volatility into the market. With Trump announcing the first round of tariffs on countries such as Canada and Mexico, the market has reacted with significant volatility in the first two months of 2025.
2025 recession probability
Regarding the probability of a market crash, Grok 3 estimated a 25% to 35% chance of a downturn based on historical patterns and market sentiment. While this is not a catastrophic prediction, the AI platform stated that stronger-than-expected corporate earnings or unforeseen policy changes could shift market dynamics unexpectedly.
Meanwhile, while Grok 3’s projection may seem mild, it differs from the sentiment of market players such as author and investor Robert Kiyosaki. As previously reported by Finbold, Kiyosaki has consistently warned that the crash is already here, though his outlook continues to be disputed after past predictions failed to materialize.
Featured image via Shutterstock
