NEW YORK, March 27 (Reuters) - Hedge funds are

increasingly betting against stocks, with Nvidia ( NVDA ),

Advanced Micro Devices ( AMD ) and Tesla as their top

three shorts placed on Wednesday, a Morgan Stanley ( MS ) note showed

on Thursday.

Wednesday was the third largest day of single stock selling

by hedge funds this year, according to the bank's institutional

equity division, led by the technology sector.

Hedge funds mostly added short positions, or bets stock

prices will fall, to their portfolios, although they also

slightly trimmed long exposures, Morgan Stanley ( MS ) added.

The hedge funds' move illustrates how hedge funds are

becoming more bearish about the stock market after back-to-back

years of gains of over 20% in the S&P 500. The index is

down 2.6% this year, as concerns about U.S. trade policy weigh.

Their targeted short bets on companies such as Nvidia ( NVDA ) and

Tesla also underscore hedge funds seeing at least some of the

once popular Magnificent Seven shares of the biggest U.S. tech

firms as expensive.

Except for Meta Platforms ( META ), shares in all other

Mag-stocks are underperforming the S&P, with Elon Musk's

carmaker Tesla down over 28% this year, while Nvidia ( NVDA ) fell more

than 15%.

Still, Morgan Stanley ( MS ) showed funds unwound short bets on

Apple ( AAPL ) and Alphabet on Wednesday.

Hedge funds' bearishness is not only concentrated in the

United States. Portfolio managers net sold European construction

materials-focused companies, as well as financials and energy.