Key Takeaways Apple launches AirPods Max 2 with Adaptive Audio, Voice Isolation and Live Translation features.
AAPL wearables sales fell 2.2% YoY to $11.49B, missing estimates and making up 8% of revenue.
Apple sees strong Watch adoption and record installed base but faces rising competition from peers.

Apple (AAPL Quick QuoteAAPL – Free Report) is expanding its Wearables, Home and Accessories portfolio with the launch of AirPods Max 2. The devices come at an opportune time as the iPhone maker faces stiff competition from the likes of Samsung, Alphabet (GOOGL Quick QuoteGOOGL – Free Report) and Garmin (GRMN Quick QuoteGRMN – Free Report) . In the first quarter of fiscal 2026, Wearables, Home and Accessories sales of $11.49 billion decreased 2.2% year over year and accounted for 8% of net sales. The figure missed the Zacks Consensus Estimate by 5.72%.

AirPods Max 2 offers features like Adaptive Audio, Conversation Awareness, Voice Isolation, and Live Translation for the first time. The Active Noise Cancellation (ANC) device is expected to gain adoption among podcasters, musicians, and content creators, with useful features like studio-quality audio recording and camera remote. Thanks to H2 and new computational audio algorithms, AirPods Max 2 deliver ANC, which is up to 1.5 times more effective than the previous generation.

Apple’s Wearables, Home and Accessories sales have been benefiting from strong adoption of Apple Watch Ultra 3 and Apple Watch Series 11, which offer a comprehensive set of health and wellness features to help users meet their health goals. AirPods 3 adoption has been noteworthy due to the rich immersive sound quality and unmatched level of ANC. In the first quarter of fiscal 2026, the wearables installed base reached a new all-time high, with over half of the customers purchasing an Apple Watch being new to the product.

Apple Faces Stiff Competition

AAPL is facing stiff competition from the likes of Alphabet and Garmin in the wearables domain. 

Alphabet’s Google Services business includes the Pixel family of devices. In 2025, Alphabet’s Google Services generated 85.1% of total revenues with revenues hitting $342.72 billion, up 12.4% from 2024. Alphabet is benefiting from accelerated growth across AI infrastructure, Google Cloud, and Search. Search is benefiting from AI Overviews and AI Mode, which have driven growth in overall queries. The launch of personal intelligence in AI Mode in search and the Gemini app bodes well for Alphabet’s prospects.  

Garmin is benefiting from strong momentum across the Fitness segment, which is primarily attributed to advanced wearables demand. The Fitness segment has continued to grow over the last few years. It generated $765.8 million of sales (36% of total sales) in the fourth quarter of 2025, which was up 42% from the year-ago quarter’s level. Garmin’s expanding Venu and vivoactive smartwatch series, which boast new health and wellness features, including nap detection and enhanced sleep coaching, has been a positive.

AAPL’s Share Price Performance, Valuation & Estimates

Apple shares have dropped 6.5% year to date, underperforming the broader Zacks Computer and Technology sector’s drop of 3%.

Apple Stock’s Performance

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

The AAPL stock is trading at a premium, with a forward 12-month price/earnings of 28.83X compared with the broader sector’s 24.18X. AAPL has a Value Score of D.

AAPL Valuation

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

The Zacks Consensus Estimate for fiscal 2026 earnings is pegged at $8.41 per share, unchanged over the past 30 days, suggesting 12.7% year-over-year growth.
 

 

 

Apple currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.