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Walmart ( WMT ) hits $1 trillion in market value for the first

time

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Palantir ( PLTR ) shares gain after quarterly results

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Obesity drugmakers drop on Novo Nordisk's outlook warning

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S&P 500 -1.46%, Nasdaq -2.17%, Dow -1.03%

(Updates with afternoon trading)

By Noel Randewich and Twesha Dikshit

Feb 3 (Reuters) - Wall Street tumbled on Tuesday as

investors worried about AI creating more competition for

software makers, keeping investors on edge ahead of quarterly

reports from Alphabet and Amazon ( AMZN ) later this week.

Nvidia ( NVDA ) dropped 3.8% and Microsoft ( MSFT ) fell

3.2%. Alphabet, which reports ‌its results on Wednesday,

lost almost 2%, while Amazon ( AMZN ) declined 3% ahead of its

report on Thursday.

Investors in recent months have become pickier about

AI-related stocks, looking for companies generating ​measurable

returns from their outsized investments in the new technology.

Wall Street's attention on Tuesday turned to technology

companies that could face steeper ‍competition and lower margins.

One catalyst driving those concerns was Anthropic's launch of a

legal tool ⁠for its Claude AI chatbot.

"We're ⁠looking at a lot of software names that are seen as

companies that may well be disrupted when we start to see the

advancement of artificial intelligence. We're seeing ‌a lot of

software companies across the spectrum get hit," said Art ​Hogan,

chief market strategist at B. Riley Wealth.

Salesforce, Adobe, Synopsys ( SNPS ),

Datadog