De Bruyne, who has already missed two chunks of the season with knee trouble, is not thought to have a serious problem after he was forced out of the last week's Bournemouth game with a hamstring complaint, although so far training has been an issue.
Stones also had to come off against Bournemouth with a muscle injury, while Fernandinho hasn't featured since the Carabao Cup final a fortnight ago.
Guardiola explained that, overall, all of City's injured players are 'getting better'.
"All of them getting better, De Bruyne is right now not fit, John Stones is not ready but the other ones are okay. Fernandinho is out [as well]," Guardiola told his weekly press conference.
PEP @fernandinho is out.— Manchester City (@ManCity) March 8, 2019
I am a fan of technology. It’s there to help the referees. UEFA will analyse at the end of the season.
The rules need to be as clear a possible but its intention is to help the referees.
It suggests that Aymeric Laporte, who initially wasn't expected to return until after the international break at the end of the month, is available to play. The French defender had missed the last two games with a muscle issue but has been training since Wednesday.
Laporte could therefore start alongside Vincent Kompany or Nicolas Otamendi at the back.
The absence of both Fernandinho and De Bruyne in midfield could present Phil Foden with a chance to start his first Premier League game of the season. The home grown teenager, who scored twice against Newport last month, has only started cup games so far in 2018/19.
Despite injury problems to several key players, City will be hoping for a good result against Watford as Guardiola has won all five games in which he has faced the Hornets.