My Top 2 Megacap Stocks to Buy After Walmart's Latest Pullback

Last year, Walmart (NASDAQ: WMT) announced that it was switching to the Nasdaq exchange because it aligned better with Nasdaqʻs "technology-forward" approach.

Thereʻs certainly a case to be made there, but Walmart also has something else in common with many tech stocks -- a high valuation. The consumer staple megacap is trading at 43 times earnings and 40 times forward earnings.

Image source: Getty Images.

Recently, analysts at Erste Group downgraded Walmart stock to a hold based on its high valuation. Investors have followed suit, as Walmart stock is down about 6% since the beginning of March.

Typically, Walmart is a stock to consider in a market downturn or during economic uncertainty, but right now, its valuation appears too high to justify a strong buy. But these two megacaps might be better options.

1. Amazon

Amazon (NASDAQ: AMZN) stock cratered in late January after the cloud computing and e-commerce giant released fourth-quarter earnings. The primary concern is overspending on AI infrastructure. Amazon said it plans to spend $200 billion on capital expenditures in 2026, some 50% more than it spent last year. Most of that spending will be on AI infrastructure.

The concern of many investors is that Amazon is already spending a lot on AI and is losing market share, so why double down and eat into free cash flow?

But Amazon made the calculation that it needed to spend significantly more to play catch-up with its rivals to build the infrastructure needed to navigate the supply constraints that have stunted its growth. Its rivals, Google, owned by Alphabet (NASDAQ: GOOG), and Microsoft (NASDAQ: MSFT), have navigated capacity constraints better than Amazon because of their investments and partnerships in key areas.

This reset should set up Amazon for future growth to handle its $244 billion in backlog contracts, which is up 40% from a year ago. The other thing that stands out about Amazon is its relatively low valuation, trading at 28 times earnings and 25 times forward earnings, which is near the lowest it's been in more than 10 years.

Wall Street is bullish on Amazon, too, with 92% of analysts rating it a buy with a median price target of $285 per share, suggesting 37% upside.

2. Taiwan Semiconductor

Taiwan Semiconductor (NYSE: TSM) is flashing the buy signal right now due to its relatively low valuation and massive growth potential.

As the worldʻs dominant semiconductor foundry, meaning they make the chips that its clients like Nvidia (NASDAQ: NVDA) design, Taiwan Semiconductor, which goes by TSMC, is in the middle of the AI super cycle.

In 2025, TSMC expanded its market share as a foundry chipmaker to 70%, up from 64% in 2024. That was based on its revenue growth of roughly 36% in 2025 to $122 billion in USD. For 2026, the company anticipates revenue to rise "close to 30%" in U.S. dollar terms, according to the Q4 earnings call.

TSMC also raised its compound annual revenue growth rate to 25% through 2029, based on its "technology differentiation" -- which includes its one-stop-shop packaging capabilities and its more efficient chips. Further, its pure play model and neutrality give it a broader customer base than other competitors.

"While we expect AI accelerators to be the largest contributor in terms of our incremental revenue growth, our overall revenue growth will be fueled by all four of our growth platforms which are smartphone, HPC (high-performance computing), IoT (Internet of Things), and automotive in the next several years," Chairman and CEO C.C. Wei said on the earnings call.

The company forecasts compound annual revenue growth from AI accelerators to be in the mid-to-high 50% range through 2029.

Taiwan Semiconductor stock is up 14% year to date and 93% over the past 12 months. Yet, with its massive growth prospects, it is still reasonably valued at 24 times forward earnings.

Wall Street is incredibly bullish on this stock, with 98% of analysts rating it a buy with a median price target of $435 per share, suggesting 28% upside.

For these reasons, both Amazon and TSMC look like better megacap options than Walmart right now.

Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, Nvidia, Taiwan Semiconductor Manufacturing, and Walmart. The Motley Fool has a disclosure policy.