I am sure anyone who owns AEHR is well aware of the customer concentration risks.
For AEHR: “Two customers accounted for approximately 82% and 12% of the Company’s net sales in the three months ended February 28, 2023.”
An example of where it could go wrong, very badly:
There is a company that I discovered this week while researching for stocks that may benefit from an AI boom. The company is CRDO.
This company’s revenue was growing at a blistering 70% YoY pace……and then the stock price unexpectedly cratered, just absolutely completely out of the blue on February 15, by -48% in a single day. FORTY EIGHT percent!!
That was when CRDO suddenly released news that one of their largest hyperscaler customers (MSFT) cut their orders, which nobody could expect, especially when you think about the ongoing rush for AI hardware data center buildouts, and yet, it happened to them. Meanwhile, the company stated the rest of their revenues excluding MSFT will still continue to grow 100% YoY…but the cuts by MSFT still meant overall revenue will grow flat YoY
CRDO last earnings call: “if we exclude Microsoft, what that means is we have in excess of 100% year-on-year growth of other product revenue from other customers, which, again, we’re very confident based on all of the traction that we’ve seen recently that we’ll be able to achieve that. And of course, I’ll just reiterate, one of the key drivers is AI in some of those programs.”