The luxury sector’s three-decade boom is over, according to Berenberg analysts whose downgrade of LVMH coincided with the stock’s biggest surge since 2001.

“Luxury is at an inflexion point,” the team led by Nick Anderson wrote in a note on Wednesday, cutting LVMH to hold from buy and Gucci-owner Kering SA to sell from hold. “We believe that the industry faces a structural demand problem, and that after three decades the luxury supercycle is over.”

In contrast to more upbeat analysts, Anderson argued that the sector’s troubles aren’t just the result of supply-side factors.

He pointed to pressure in China, a squeeze on incomes among aspirational consumers and shifting habits among younger shoppers as factors that have reshaped the landscape since the “exceptional” 2010s — when the luxury boom was fuelled by surging Chinese demand and US spending. Berenberg expects demand growth of 2-3% per year in the medium term, compared to a historical norm of around 6%.

The call stands out in light of Wednesday’s gain for LVMH, when shares posted the biggest intraday jump since September 2001. The owner of Louis Vuitton and Christian Dior reported a return to sales growth, suggesting that a slump in luxury demand is easing, lifting shares of rivals including Kering. LVMH shares traded steady Thursday.

UBS Group AG raised its estimates on LVMH Thursday, upgrading the stock to buy and noting “momentum is back” following “thesis-changing” results. LVMH call option volumes spiked on earnings day to the highest in 16 years.

Following a turbulent first half, a gauge tracking the luxury sector has surged by about 20% in the past two months, as a relief rally took hold amid signs that the Trump administration’s tariffs have inflicted less damage than expected.

Still, that has pushed valuations to demanding levels and analysts have been mostly cautious when it comes to calling a recovery.

Anderson noted that he sees a divide between “absolute” luxury consumers, who are driven by wealth, and aspirational buyers driven by income. Berenberg’s positioning includes being short aspirational luxury exposure, long absolute and long sporting goods.

Aspirational consumers are “being squeezed” he said, citing the pressures of higher inflation, rising housing costs, uncertain tax burdens and fear of artificial intelligence-driven job losses. LVMH and Kering skew more toward aspirational consumers than some of their rivals, the analysts said.

While spending by Americans could potentially offset some of the Chinese weakness, “the short-term outlook is complex and uncertain,” said Anderson.