Qualcomm Inc. (QCOM) shares plunged over 5% in after-hours trading on Wednesday, despite reporting better-than-expected first quarter fiscal 2025 earnings and revenue. The stock's decline appears to reflect lingering concerns over the company's heavy dependence on the maturing smartphone chip market and potential loss of significant business from Apple.

For the quarter ended December 25, 2024, Qualcomm posted earnings of $3.41 per share on revenue of $11.67 billion, surpassing Wall Street estimates of $2.93 EPS and $10.92 billion revenue. However, the strong results were overshadowed by the company's ongoing transition away from its core smartphone chip business.

While Qualcomm has made progress in diversifying into areas such as automotive chips, Internet of Things (IoT), and licensing/royalties, the smartphone segment still accounts for a hefty 75% of its chip revenue. This market is facing headwinds from lengthening replacement cycles and tepid growth in worldwide smartphone sales.

Adding to the concerns, Qualcomm is at risk of losing a significant portion of its business from Apple, as the tech giant prepares to substitute its own 5G chips in place of Qualcomm's offerings starting this fall. Analysts estimate that Qualcomm could lose over 10% of its sales from the Apple transition by the end of 2026.