Updates with close of session

By Noel Randewich and Pranav Kashyap

Feb 4 (Reuters) - U.S. stocks ended lower on Wednesday, with losses in Advanced Micro Devices, Palantir and other technology companies, as investors worried about pricey valuations and whether Wall Street's AI rally has reached its peak.

Alphabet GOOGL.O fell ahead of its quarterly results after the bell, which will give investors a fresh glimpse of how much the Google-owner's massive investments in AI are contributing to its top-line sales growth.

Advanced Micro Devices AMD.O tumbled after the chipmaker forecast quarterly revenue that disappointed investors and suggested it is having a tough time competing against AI heavyweight Nvidia NVDA.O.

Nvidia dropped and the PHLX semiconductor index .SOX ended sharply lower.

Palantir PLTR.O slumped, reversing sharp gains from the previous day that were driven by the AI data company's strong quarterly sales.

"The size of the infrastructure buildout is unprecedented, and the pace of consumers and businesses adopting AI tools is also unprecedented. The stock market is having a really hard knowing where to price the stocks and what the future looks like. ... The market is suddenly skeptical and concerned about it," said Jed Ellerbroek, a portfolio manager at Argent Capital in St. Louis.

Some software companies added to recent losses amid worries that rapidly advancing AI could disrupt industry incumbents. Snowflake SNOW.K and Datadog DDOG.O both fell.

"If you've got legacy software that's old and clunky, you're a ripe target for AI. We're a bit bearish on software in general, with the whole impetus of AI," said Josh Chastant, Portfolio Manager, public investments at GuideStone Funds.

Investors selling AI-related stocks shifted into less pricey companies that sat out the tech rally in recent years. The S&P 500 value index .IVX gained for a fifth straight session, while the S&P 500 growth index .IGX dropped.

According to preliminary data, the S&P 500 .SPX lost 35.59 points, or 0.51%, to end at 6,882.22 points, while the Nasdaq Composite .IXIC lost 350.61 points, or 1.51%, to 22,903.13. The Dow Jones Industrial Average .DJI rose 246.56 points, or 0.51%, to 49,487.55.

Super Micro Computer's SMCI.O shares jumped after the company raised its annual revenue forecast on sustained demand for its AI-optimized servers as companies ramp up data-center capacity.

Limiting losses in the S&P 500, shares of the drugmaker Eli Lilly LLY.N rallied after the company forecast 2026 profit above Wall Street expectations.

The government's closely watched jobs report for January has been pushed back from its scheduled release on Friday due to a four-day partial government shutdown that ended on Tuesday.

In the meantime, the ADP national employment report on Wednesday showed that U.S. private payrolls increased less than expected in January amid job losses in the professional and business services as well as manufacturing sectors.

(Reporting by Pranav Kashyap and Twesha Dikshit in Bengaluru, and by Noel Randewich in San Francisco; Editing by Shilpi Majumdar, Shinjini Ganguli, Krishna Chandra Eluri)

((noel.randewich@thomsonreuters.com))