(Updates to close)

By Sinéad Carew and Johann M Cherian

Feb 24 (Reuters) -

The Nasdaq composite closed down 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 ( NVDA ).

The S&P 500 closed slightly lower while the Dow was close to

unchanged.

Demand for Nvidia's ( NVDA )'s pricey AI chips will be in

focus when it reports results on Wednesday. Investors have been

questioning hefty spending on the technology 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 ( MSFT ) has

scrapped leases for sizeable data center capacity in the U.S.,

suggesting a potential oversupply of AI infrastructure.

Microsoft ( MSFT ) 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.

And, 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 ( WMT ).

"Volatility is being driven by market uncertainty about

whether we're facing a growth scare or an inflation scare," said

Goldman.

According to preliminary data, the S&P 500 lost 29.18

points, or 0.49%, to end at 5,983.95 points, while the Nasdaq

Composite lost 238.49 points, or 1.22%, to 19,285.51.

The Dow Jones Industrial Average rose 33.93 points, or

0.08%, to 43,469.97.

The more defensive healthcare index was leading

percentage gains throughout the session while technology

was the biggest laggard.

"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 ( AAPL ) gained ground 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 ( BRK/A ) shares and hit record

highs in early trading, after Warren Buffett's conglomerate

reported a record annual profit.

Nike ( NKE ) added advanced after Jefferies raised its

rating to "buy" from "hold".