The good times may be over for SMCI, says Nomura Securities, downgrading the stock to "neutral".

Shares of Advanced Micro Devices (AMC.US) have risen more than 216% since the beginning of the year, helped by the AI boom. However, analysts at Nomura believe the “good times” for Advanced Micro Devices may be nearing an end.

Donnie Teng, an analyst at Nomura, cut his rating on Advanced Micro Devices from “buy” to “neutral”, while maintaining a price target of $93. The stock price of the server maker rose 0.49% to $899.98 on Wednesday, reversing earlier losses.

Teng said: “We think it is difficult to have a clear view on the near to medium-term outlook for Advanced Micro Devices, as its dominant position in liquid-cooled solutions may be partially masked by uncertainty in AI server orders.”

The surge in Advanced Micro Devices’ stock price was driven by the company’s role in providing hardware for Nvidia’s (NVDA.US) graphics processors. Teng said this advantage may temporarily turn into a disadvantage as orders are uncertain during the transition from Nvidia’s Hopper chip to the next-generation Blackwell chip.

The stock price of Advanced Micro Devices fell after the company released its third-quarter earnings report earlier this year, indicating a tougher market environment. Although the stock price recovered some of its losses, this suggests limited upside for the company beyond market expectations.

This may mean that the market will be indifferent to the expected guidance of $5.1bn to $5.5bn in sales for the second quarter, despite Teng’s belief that the company can deliver a gross margin of 14% above consensus.

Teng said: “Advanced Micro Devices’ liquid-cooled solutions give it a competitive edge and should support its gross margin. However, limited visibility on orders due to the uncertainty mentioned above may make it difficult for Advanced Micro Devices to deliver above expectations on sales, which we think may make it a mixed bag.”