Shares of Credo Technology Group Holding Ltd (CRDO) plunged 18.3% in pre-market trading on Wednesday, following the company's mixed Q3 earnings report and analyst downgrades highlighting concerns over its high customer concentration and uncertainty around future demand.

In its fiscal Q3 2025 earnings call, Credo reported record revenue of $135 million, up 87% sequentially, driven by a major ramp with its largest hyperscale customer for AI platforms. However, this customer accounted for a staggering 86% of Credo's Q3 revenue, raising concerns about the company's customer diversification.

Multiple analysts downgraded Credo's stock, citing risks associated with its dependence on a single major customer. While the company expects to diversify its customer base in the coming quarters, analysts expressed doubts about the timing and extent of this diversification, leading to fears of potential "air pockets" in future demand.