The first operator will be faster. But the first 150 entries are randomly selected. Entries updated in both queries may not be the same. Since you spit out updates in a batch, your approach may not update all records.
I will do this using the following approach, more consistent than your approach.
;WITH cte
AS (SELECT TOP (350) value1,
value2,
value3
FROM database1
WHERE value1 = '123'
ORDER BY ID
)
UPDATE cte
SET value1 = '',
value2 = '',
value3 = ''
, .