Apple posted a record September quarter on Monday. Wearables were the one part of the business that went backwards, and the way Apple explained it tells you more about the watch market than the number does.
The company reported fiscal fourth quarter revenue of $114.5 billion, up 12 percent, with September quarter records for total revenue, iPhone revenue and earnings per share. Its Wearables, Home and Accessories line came in at $8.3 billion, down from $9.0 billion a year earlier. That is a 7.9 percent decline, straight from Apple's own net sales by category table in the earnings release.
Apple's stated reason, repeated on the call, is a tough comparison. The September 2025 quarter contained the launch of the Apple Watch SE 3 and the AirPods Pro 3. This year's September quarter did not, because Apple did not launch a new SE, and the flagship watches moved up instead.
That explanation is honest, and it also hides more than it reveals.
What is actually inside that $8.3 billion
Apple bundles watches, headphones and a spatial computer into one line, and the company's annual report spells out exactly what is in there.
Per the fiscal 2026 Form 10-K filed Tuesday, the segment covers "smartwatches, wireless headphones and spatial computers," naming the Apple Watch Series 12, Ultra 4 and SE 3 alongside AirPods, AirPods Pro, AirPods Max, Beats and Apple Vision Pro.
There is no Apple Watch number. There never is. So any headline you see claiming Apple Watch sales fell 8 percent is reading a three-product line as if it were one product.
One detail from the 10-K makes the comparison argument more complicated than Apple's version. The Series 12 and Ultra 4 are listed among the products introduced in the fourth quarter of 2026. Apple shipped brand new flagship watches inside the quarter that declined. The decline happened despite new hardware, not in a gap between launches.
Apple also shipped no new Apple TV 4K, HomePod mini or Apple HomeView in the quarter, according to the call commentary. That leaves watches and AirPods carrying a segment that still fell.
The full year is a different story
Zoom out and the 8 percent gets much less dramatic.
| Q4 FY2026 | Q4 FY2025 | FY2026 | FY2025 | |
|---|---|---|---|---|
| Wearables, Home and Accessories | $8.30B | $9.01B | $35.58B | $35.69B |
Full year, the segment went from $35.686 billion to $35.577 billion. That is a decline of 0.3 percent, which is flat, not a collapse. The company also finished the year with total revenue of $478.8 billion, up 15 percent.
A segment that falls 8 percent in a single quarter and lands within a rounding error of last year overall is not collapsing. It is cycling. September 2025 was unusually loaded for that segment, and September 2026 was not.
Why this matters for watches specifically
The relevant question for anyone watching the watch market is whether Apple Watch demand is softening. The filing cannot answer it, and that is the real story here.
What we can say with numbers:
- New flagship watches shipped. Series 12 and Ultra 4 launched in September, and both are named in the 10-K as fourth quarter introductions.
- The entry tier did not. The SE 3 was a September 2025 launch, so this quarter had nothing fresh at the low end, where volume lives.
- The whole segment moved down, not just watches, and Apple's own explanation points at the product mix rather than demand.
If Apple Watch units had fallen hard while AirPods held, the segment number would look identical to the one Apple published. That is the limit of the disclosure, and it has been the limit since Apple folded the watch into this line.
The rest of the market is not flat
Contrast matters here. Garmin posted its own record September quarter, with revenue of $1.99 billion up 12 percent and its outdoor segment up 20 percent on the back of the Fenix 9 launch, as we covered in Garmin's Q3 earnings breakdown.
Global smartwatch shipments had already fallen 4 percent in the second quarter of 2026 while Garmin grew 11 percent, which we went through in the Q2 shipment numbers.
Put those together and the shape of the market is a flat-to-shrinking middle with growth concentrated in dedicated fitness watches and in Apple's premium tier. Apple's segment number is consistent with that. It just does not prove it.
The memory problem hanging over the next two quarters
The other thing the call did was set up a harder environment for everything Apple sells with a chip in it.
Apple's new chief executive John Ternus called the memory situation "unprecedented" and said the company expects even higher memory costs in the December quarter, with memory prices continuing to climb beyond it. Price increases in June and September offset some of that pressure. Gross margin guidance for the December quarter is 45 to 46 percent, down from 47.9 percent this quarter.
A watch is a small device with a lot of silicon in it, and the Series 12 carries a new S11 chip. If component costs keep rising, the cheapest Apple Watch gets harder to keep cheap, which is exactly the tier that was missing from this quarter.
Apple guided to 7 to 10 percent total revenue growth in the December quarter, which would be its best quarter ever. It did not break out expectations for the wearables line, and it never does.
The buying picture
If you were waiting for the Series 12 to get cheaper before upgrading, the December quarter is the wrong one to hope for. Apple Watch Series 12 pricing on Amazon has been steady since launch, and higher memory costs give Apple no reason to cut.
The other side of it is that the SE 3 is now a year old and still in the lineup, which makes it the value play in the range for anyone who wants a watch for training and notifications rather than Siri Recap. It is worth checking current SE 3 deals before assuming the flagship is the better buy.
For context on what actually changed in this year's models, our Series 12 and Ultra 4 comparison covers the hardware gap.
Bottom Line
Apple's wearables line fell 8 percent in the September quarter, and the honest reading is that this is a comparison problem, not a demand signal. The full year is flat at $35.6 billion, the flagship watches were new in the quarter that fell, and the missing piece was the cheap model Apple did not refresh.
What is genuinely notable is that Apple refuses to tell anyone which part moved. Watch buyers, and the people who write about watches, are left reading a combined number for watches, headphones and a headset, then guessing.
Apple's December guidance of 7 to 10 percent growth, plus rising memory costs, means the next two quarters will test whether the flat year was a plateau or a pause.
Sources: Apple's fiscal 2026 fourth quarter earnings release (Form 8-K exhibit 99.1, net sales by category), Apple's fiscal 2026 Form 10-K filed November 3, 2026, Apple Newsroom's fourth quarter results announcement, MacRumors' earnings takeaways, CNBC's live earnings coverage, and The Apple Post's segment breakdown. Segment revenue figures are taken directly from Apple's filing, not from secondary reporting.
