Artificial intelligence development has more potential to impact the way LOM invests money than does a new president in Washington.

That was the word from James Balfour and Bryan Dooley, of local investment firm LOM, in a webinar about financial markets in 2025.

“The investments process generally remains the same with a change of power,” Mr Dooley, chief investment officer at LOM, said.

However, he thought AI adoption and integration was going to be a very powerful, long-term theme in the market.

“A lot of money is being spent by large companies on AI, and it seems to be starting at the large megacap tech companies and trickling its way down,” Mr Dooley said.

On Monday, American multinational microchip producer Nvidia saw its stock plummet 17 per cent owing to concerns about increased competition from Chinese AI lab DeepSeek. Nvidia supplies chips to American AI research firm OpenAI, inventors of AI model ChatGPT.

“DeepSeek is a Chinese hedge fund that had a pet project, to replicate AI large language models similar to ChatGPT,” Mr Dooley explained. “On Monday, they claimed to have developed it for a fraction of the core cost that OpenAI did.”

DeepSeek gave its development costs as $6 million, compared with OpenAI’s billion-dollar price tag. There is doubt in some quarters that DeepSeek is telling the truth about its costs, but Mr Dooley said there is likely some truth in it.

The investment expert said if AI can be done with fewer Nvidia chips, or with older versions, that could make it cheaper for a number of smaller companies.

“It was clearly a warning shot across the bow,” Mr Dooley admitted, but did not think it signalled any kind of death knell for American companies.

“If we can access AI models that have a reasonable performance at this level of cost, that is just going to make AI even more prevalent globally,” he said. “People are going to want to use it more. If you are able to run it on not the most modern Nvidia chips, then that allows you to reduce the amount of energy it uses.”

Mr Dooley said the big AI firms were spending a “couple of trillion dollars” to power AI machines and data centres with the most advanced Nvidia chips.

However, uncertainty over the way AI will play out could feed volatility in the market.

LOM senior investments manager Mr Balfour said last year’s market performance was dominated by big tech names, but now there are signs of change.

“We should start to see some other names performing that are not just the those big-tech names,” he said.

Mr Balfour said the US continues to be one of the highest-performing and highest-valued markets in the world.

“That has been justified given the growth in the US and US companies,” he said. “The US market is also more tech-centric.”

As a result, European markets were much less impacted by the emergence of DeepSeek.

Mr Dooley did say there were some factors of the new administration that could cause a tailwind for the financial sector such as increased deregulation.

“The regulatory shift will create a better pro business stance,” he said. “For the last couple of years, interest rates have been edging up overall, and that creates better net interest margins. Another positive trend is that there would be improved mergers and acquisitions activity. Right now there are 4,500 banks in the in the United States, which is about ten times the number that you would see in just about any other developed country. Back in the Nineties there were more than 10,000.”

He said consolidation among banks has been a continuing process that usually increases profitability.