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Tech stocks were battered in July as the AI trade stalled amid increasing concerns over valuations, capital expenditure (CapEx), and mixed earnings results. But that short-term weakness in tech exposed underlying strength in other corners of the market.

In the second half of 2026, earnings growth for companies outside the Magnificent Seven is forecast to narrow the gap and outpace the group in Q4, with that broader earnings participation becoming a defining feature of the next phase of the bull market.

That broadening is shining a light on two stocks—one in the consumer staples sector and one in the consumer discretionary sector—that have unencumbered scale, unwavering consumer demand, and nearly formidable competitive moats. Each provides a rare combination of stability and growth that can make them potential core holdings in a diversified portfolio.

A High-Growth Dividend King Redefining Consumer Staples

From 2013 to 2025, Walmart (NASDAQ: WMT) topped the Fortune 500 list by revenue before dropping to #2 behind Amazon (NASDAQ: AMZN). The company’s merchandising mix covers groceries, household goods, apparel, electronics, and pharmacy services, all of which are supplemented by private-label products and category-specific offerings.

Yet despite its 64-year history and roughly 21% share of the U.S. grocery market, Walmart doesn’t operate like a legacy company. The company is a Dividend King, but the consumer staples mainstay has evolved into a growth machine whose yield has become the cherry on top for shareholders.

Walmart pairs its physical brick-and-mortar network with online platforms and mobile applications to provide omnichannel shopping, fulfillment, and delivery options for consumers and businesses. During the company’s fiscal Q1 2027 earnings call, CFO John David Rainey noted that Walmart+ net additions reached a new Q1 high. Rainey added that Walmart+ members spend four times more than non-members, with seven times more e-commerce visits each year.

That transformation has materialized in earnings growth, which has averaged 27.84% year over year (YOY) since 2024, alongside average free cash flow growth of 13.16% over the same period. Since the stock’s five-year low on May 20, 2022, WMT has gained about 180% while paying a dividend that currently yields 0.89%, or 99 cents per share annually.

Despite CapEx Concerns, AWS Growth Shows Amazon’s AI Investments Are Working

In the 2026 Fortune 500 rankings, Walmart’s 13-year revenue-leader streak came to an end. With more than $713 billion, the company still ranked second, only bested by Amazon, which posted revenue of nearly $717 billion.

While much of the recent criticism of Amazon has focused on AI CapEx, which, according to updated guidance, is expected to hit approximately $220 billion by year’s end, the investment thesis should focus on AWS. As the world’s largest cloud provider, AWS controls an estimated 28% to 30% of the global market.

When Amazon reported Q2 results on July 30, investors were given stronger evidence that the company’s AI infrastructure spending is already translating into faster cloud growth. AWS reaccelerated sharply, helping shift the debate from whether Amazon is spending too much to whether it is building enough capacity.

AWS revenue grew nearly 37% YOY, good for its fastest pace in 18 quarters. As a whole, Amazon’s total operating income increased by more than 40% YOY, with margins expanding at the same time. The company’s total revenue growth accelerated to nearly 20% in Q2 from approximately 17% in Q1.

But like Walmart, Amazon isn’t just a single-segment story. Its commerce and advertising businesses remained strong, with more than 40% growth in the number of items delivered same-day or overnight, over 50% growth in monthly active perishables customers since the start of the year, and 26% advertising revenue growth to $19.8 billion.

CEO Andy Jassy noted in his earnings call comments that “AWS is now a $169 billion annualized revenue run rate business, which, for perspective, would place it 24th on the Fortune 500 list if it was a standalone company.”

Jassy also highlighted that:

• Amazon’s chips business now has an annual revenue run rate of over $25 billion, growing triple-digit percentages YOY.

• AWS's AI revenue run rate climbed significantly quarter-over-quarter and is also now over $25 billion, having grown by triple-digit percentages YOY.

• Amazon Graviton Processors are now used by 98% of the company’s top 1,000 Elastic Compute Cloud—or EC2—customers, with revenue commitments having increased nearly 3x since Q1, and Graviton5 growing nearly twice as fast as Graviton4 did.

 

Those numbers are the best argument for Amazon’s CapEx, but as an AI hyperscaler, e-commerce dominator, and the world’s largest cloud provider, investors are already seeing evidence that those outlays can generate returns. While tech stocks sold off broadly last month, AMZN is up nearly 18% since July 1, more than 20% year to date, and more than 238% since its five-year low on Dec. 30, 2022.

Turning to Walmart and Amazon as Portfolio Pillars

While owning either company makes sense, the argument in favor of owning both is increasingly defensible. The combination of WMT and AMZN takes advantage of two dominant e-commerce ecosystems while simultaneously providing yield and AI growth exposure.

Roughly 90% of the U.S. population lives within 10 miles of a Walmart location, and groceries account for over half of the company’s revenue, providing shareholders with a consumer staples hedge that provides steady cash flow, 53 years of consecutive dividend growth, and lower volatility (current beta of about 0.6).

On the other hand, Amazon complements Walmart by offering greater capital-appreciation potential, exposure to AI and cloud services, and expanding profit margins. Meanwhile, both companies are positioning their businesses for future growth, with Walmart expanding into e-commerce and memberships and Amazon expanding its physical footprint and grocery segment.

Last year, the companies’ combined revenue exceeded $1.43 trillion—a figure larger than the nominal gross domestic product (GDP) of all but approximately 18 countries, although company revenue and GDP are not directly comparable measures. Whether through physical dominance or digital infrastructure, Amazon and Walmart control the modern consumer pipeline, providing investors with a blend of defensive value, tech growth, and unparalleled scaling ability.

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