Garmin had a very good quarter. It also spent part of the earnings call explaining why the next one gets more expensive.
On October 28 the company reported record third-quarter revenue of $1.99 billion, up 12 percent, with gross margin at 63.3 percent and pro forma EPS of $2.76, up 39 percent. It raised full-year guidance at the same time. Then CEO Cliff Pemble moved to the part of the call investors actually came for: what happens when the cheap memory runs out.
What Garmin actually said
Garmin went into this year sitting on a stockpile of components bought before prices spiked. That cushion is ending. From the call transcript:
Our results will soon reflect the higher cost of memory and other raw materials which have increased significantly since last year, driven by both high demand and limited supplies.
Asked directly about pricing power, given that Garmin customers tend to buy on features rather than price, Pemble did not shut the door:
Definitely pricing is something that, when I mentioned the mitigations that we can use, it is one of the things that we can look at. It is one of the tools that we have, but we do not overfocus on one particular thing, and we try to get the best balance of all the different ways that we can mitigate cost increases in our supply chain.
That is not an announcement. Garmin has not raised watch prices and has not said it will. It is a company telling you, in the language companies use when they want the option without the headline, that a price increase is a live option for 2027.
The memory crunch, briefly
The shortage driving this is not really about watches. Memory production has been squeezed by the buildout of AI data centers, which has pushed DRAM and NAND pricing up across the consumer electronics industry. Phones, laptops and tablets have already been hit. Watches use far less memory than a phone, which is why the category sat out the first wave.
Sitting it out is not the same as escaping it. Pemble said Garmin is now buying components at prices significantly higher than last year, and he noted the crunch has second-order effects beyond memory itself, including availability and pricing pressure on PCBs and cabling.
CFO Doug Boessen put timing on it during the call: memory had only a small impact in Q3, more of it lands in Q4, and that Q4 hit is already baked into the raised guidance. For 2027 he pointed at three moving parts, naming continued higher memory costs alongside segment mix and the usual currency and product mix effects.
Why inventory went up 27 percent
One line in the report explains the strategy better than any quote. Garmin's inventory climbed to roughly $2.3 billion, up about 27 percent since December, and third-quarter free cash flow fell to $293 million from $425 million a year earlier.
That is not Garmin failing to sell watches. Boessen described it as a deliberate push to increase inventory of certain components to blunt supply risk, and Pemble added that Garmin makes prepayments to suppliers to secure allocation. When an analyst asked how those prepayments are structured, Boessen said they are tied to the memory situation and negotiated one supplier at a time.
In other words, Garmin is spending cash now to lock in parts it expects to be scarce and expensive later. That is what a company does when it thinks the shortage has room to run.
What this means if you are buying a watch
Nothing changes this week. The Fenix 9, Fenix 9 Pro, Enduro 4 and the rest of the lineup are at their launch prices, and the holiday discount cycle is already running, which we covered in our early Black Friday watch deals roundup.
The interesting question is 2027. Garmin's launch cadence means the next round of flagship hardware lands in that window, and if memory costs stay where they are, those watches are more likely to arrive with higher price tags than with the same ones. That is an inference from what management said, not a Garmin statement, and the company has plenty of levers before it gets to the sticker price: vertical integration, its own factories, and a portfolio wide enough to absorb shocks. Pemble pointed back to the tariff scare a year ago as the template for how Garmin handles this.
If you are planning a purchase in the first half of next year, the math favors buying earlier. A Garmin Fenix 9 bought at today's price is a hedge against a price rise that may or may not come, and a Forerunner is where most people start if the flagship is more watch than they need.
The quarter underneath the warning
It would be easy to read this as bad news. It is not. Outdoor grew about 20 percent on the strength of adventure watches, which in practice means the Fenix 9, and it did that with roughly a month of Fenix 9 sales on the books. Operating income hit a record $612 million, up 34 percent, at a 30.8 percent operating margin.
The wearables side of the business is also carrying more weight than it used to. Garmin is still working through CIRQA and Fenix backorders, and band owners are signing up for Connect Plus, a story we broke down here. The company also shipped a big beta for the Fenix 9 family this weekend, with pack weight cards and a batch of crash fixes, which we covered here.
So the pitch from Olathe is: demand is strong, margins are at records, and the input costs are about to get worse. Two of those three are good for Garmin. The third is the one that eventually reaches your wallet.
Bottom Line
Garmin is not raising prices today, and anyone claiming otherwise is reading the call wrong. What the company did was put price on the record as one of several tools for offsetting memory and materials costs heading into 2027, while simultaneously stockpiling components and warning that its results will soon reflect the higher costs.
For watch buyers, that adds up to a simple read. If a Fenix 9 or an Enduro 4 is on your list for next year, there is a real case for buying it while the current pricing holds, especially with holiday discounts already live. If you can wait, wait, but do not expect 2027 hardware to be cheaper than 2026 hardware. The parts inside it already are not.
Sources: Garmin's October 28, 2026 third-quarter results press release for revenue, margins, operating income and pro forma EPS; the Q3 2026 earnings call transcript for Cliff Pemble's remarks on memory and raw material costs and on pricing as a mitigation tool, and for Doug Boessen's comments on Q4 impact, 2027 margin drivers, inventory and supply prepayments; TechRadar's October 28 report on the RAM shortage and Garmin's shift to buying memory at higher prices; Garmin Rumors' Q3 call takeaways for the inventory, free cash flow and prepayment details; and Gadgets & Wearables' October 28 analysis of the pricing comments. Garmin has not announced any price increase.
