Tech Stocks Tumble as AI Concerns Weigh on Nasdaq and S&P 500

Nasdaq, S&P 500 fall as AI caution weighs on tech, Nvidia results in focus

The Nasdaq Composite dropped over 1% amid concerns about AI demand and upcoming Nvidia results. The S&P 500 marked its third decline in a row, while the Dow saw a slight gain. Market jitters driven by spending on AI and weak economic data heightened volatility. Microsoft and Nvidia saw notable declines.The Nasdaq Composite fell more than 1% on Monday, with big technology stocks creating the biggest drag as investors worried about demand for technology supporting artificial intelligence while they waited for results from market heavyweight Nvidia. The S&P 500 closed slightly lower, marking its third straight day of declines, while the Dow managed to eke out a tiny gain. It was also Nasdaq's third consecutive loss and its fourth daily drop of more than 1% so far in February. Investors were concerned about future demand for Nvidia's pricey AI chips as they awaited its quarterly results on Wednesday. Worries about hefty spending on the technology have mounted since low-cost AI models from China's DeepSeek rattled the industry in January. Adding to uncertainty, a TD Cowen analyst note published late on Friday reported that Microsoft Corp has scrapped leases for sizeable data center capacity in the U.S., suggesting a potential oversupply of AI infrastructure. Microsoft said its plan to invest over $80 billion in AI and cloud capacity this fiscal year was intact but that it "may strategically pace or adjust" infrastructure in some areas. "Markets are already jittery and looking for a reason to take profits," said Gene Goldman, chief investment officer at Cetera Investment Management, noting that any question about AI is seen as a reason to take profits since the technology has driven market growth for the last few years. Along with worries about tariffs and inflation, investors are getting more anxious about economic growth after last week's batch of weak economic data and a disappointing forecast from Walmart. "Volatility is being driven by market uncertainty about whether we're facing a growth scare or an inflation scare," said Goldman. The Dow Jones Industrial Average rose 33.19 points, or 0.08%, to 43,461.21, the S&P 500 lost 29.88 points, or 0.50%, to 5,983.25 and the Nasdaq lost 237.08 points, or 1.21%, to 19,286.93. The more defensive healthcare index led percentage gains, closing up 0.75% while technology was the biggest laggard, ending down 1.43%. Nvidia was the S&P 500's biggest index point drag, ending the session down 3.1%, and it was followed by chip maker Broadcom Inc, down 4.9%, Amazon.com, down 1.8%. Microsoft shares ended down 1%. The tech sector's biggest percentage decliner with, a 10.5% drop, was another popular AI stock, Palantir Technologies . "The dominance of the AI tech trade has run its course, not that these companies aren't great stocks. We're headed for a major digestion phase," said Peter Boockvar, CIO at Bleakley Financial Group. On the data front, the Personal Consumption Expenditure index - the Federal Reserve's preferred inflation gauge - is expected on Friday and could help markets gauge the timing of the central bank's first rate cut this year. Interest rate futures indicate trader expectations that the Fed will leave borrowing costs unchanged until June, according to CME Group's FedWatch tool. In individual stocks, Apple finished up 0.7% after the iPhone maker unveiled plans to spend $500 billion in U.S. investments in the next four years, including setting up a factory in Texas for AI servers. Berkshire Hathaway shares hit record highs in early trading, after Warren Buffett's conglomerate reported a record annual profit and its class B shares ended up more than 4%. Nike finished up 4.9% after Jefferies raised its rating to "buy" from "hold". Declining issues outnumbered advancers by a 1.25-to-1 ratio on the NYSE where there were 90 new highs and 134 new lows. On the Nasdaq, 1,518 stocks rose and 2,888 fell as declining issues outnumbered advancers by a 1.9-to-1 ratio. The S&P 500 posted 28 new 52-week highs and 8 new lows while the Nasdaq recorded 40 new highs and 232 new lows. On U.S. exchanges about 15.32 billion shares changed hands compared with the 15.34 billion average for the last 20 sessions.

Nasdaq, S&P 500 fall as AI caution weighs on tech, Nvidia results in focus

* Berkshire Hathaway hits record high after record Q4 profit The Nasdaq Composite fell more than 1% on Monday, with big technology stocks creating the biggest drag as investors worried about demand for technology supporting artificial intelligence while they waited for results from market heavyweight Nvidia. The S&P 500 closed slightly lower, marking its third straight day of declines, while the Dow managed to eke out a tiny gain. It was also Nasdaq's third consecutive loss and its fourth daily drop of more than 1% so far in February. Investors were concerned about future demand for Nvidia's pricey AI chips as they awaited its quarterly results on Wednesday. Worries about hefty spending on the technology have mounted since low-cost AI models from China's DeepSeek rattled the industry in January. Adding to uncertainty, a TD Cowen analyst note published late on Friday reported that Microsoft Corp has scrapped leases for sizeable data center capacity in the U.S., suggesting a potential oversupply of AI infrastructure. Microsoft said its plan to invest over $80 billion in AI and cloud capacity this fiscal year was intact but that it "may strategically pace or adjust" infrastructure in some areas. "Markets are already jittery and looking for a reason to take profits," said Gene Goldman, chief investment officer at Cetera Investment Management, noting that any question about AI is seen as a reason to take profits since the technology has driven market growth for the last few years. Along with worries about tariffs and inflation, investors are getting more anxious about economic growth after last week's batch of weak economic data and a disappointing forecast from Walmart. "Volatility is being driven by market uncertainty about whether we're facing a growth scare or an inflation scare," said Goldman. The Dow Jones Industrial Average rose 33.19 points, or 0.08%, to 43,461.21, the S&P 500 lost 29.88 points, or 0.50%, to 5,983.25 and the Nasdaq lost 237.08 points, or 1.21%, to 19,286.93. The more defensive healthcare index led percentage gains, closing up 0.75% while technology was the biggest laggard, ending down 1.43%. Nvidia was the S&P 500's biggest index point drag, ending the session down 3.1%, and it was followed by chip maker Broadcom Inc, down 4.9%, Amazon.com, down 1.8%. Microsoft shares ended down 1%. The tech sector's biggest percentage decliner with, a 10.5% drop, was another popular AI stock, Palantir Technologies . "The dominance of the AI tech trade has run its course, not that these companies aren't great stocks. We're headed for a major digestion phase," said Peter Boockvar, CIO at Bleakley Financial Group. On the data front, the Personal Consumption Expenditure index - the Federal Reserve's preferred inflation gauge - is expected on Friday and could help markets gauge the timing of the central bank's first rate cut this year. Interest rate futures indicate trader expectations that the Fed will leave borrowing costs unchanged until June, according to CME Group's FedWatch tool. In individual stocks, Apple finished up 0.7% after the iPhone maker unveiled plans to spend $500 billion in U.S. investments in the next four years, including setting up a factory in Texas for AI servers. Berkshire Hathaway shares hit record highs in early trading, after Warren Buffett's conglomerate reported a record annual profit and its class B shares ended up more than 4%. Nike finished up 4.9% after Jefferies raised its rating to "buy" from "hold". Declining issues outnumbered advancers by a 1.25-to-1 ratio on the NYSE where there were 90 new highs and 134 new lows. On the Nasdaq, 1,518 stocks rose and 2,888 fell as declining issues outnumbered advancers by a 1.9-to-1 ratio. The S&P 500 posted 28 new 52-week highs and 8 new lows while the Nasdaq recorded 40 new highs and 232 new lows. On U.S. exchanges about 15.32 billion shares changed hands compared with the 15.34 billion average for the last 20 sessions. (Reporting by Sinéad Carew in New York, Johann M Cherian, Sukriti Gupta and in Bengaluru; Editing by Devika Syamnath and David Gregorio)