As we head into 2023, many of the major challenges in the stock market this year — including decades-high inflation, rising interest rates, a slower economy and a weaker consumer — are still unresolved. Against this backdrop, Wall Street analysts have been revealing the top stocks they believe can hold up next year. Many of them we have been owning. Here's what the analysts are saying, and below will be our takes.

1. Advanced Micro Devices

Analyst take: Advanced Micro Devices (AMD) is positioned for a “rebound in the near term,” UBS said, after the chipmaker’s business felt the pain from the slowdown in the consumer personal computer market in 2022. Analysts are optimistic on AMD’s PC business next year, given the company’s focus on reducing inventory. They also see strength in its data center business and momentum in cloud workloads. These strengths will outweigh macroeconomic weakness.

Our take: The semiconductor company has been working through its PC inventory correction, which we believe will be over at some point. More importantly, the company is more strongly positioned on the enterprise side, which grows secularly, and will continue to play an important role in the global economy.

2. Alphabet

Analyst take: Alphabet (GOOGL) is a 2023 favorite at Truist, which believes the tech giant can deliver “mid-to-high single digit growth” next year while it continues investing in growth initiatives such as cloud and artificial intelligence projects. Analysts also believe Google can keep gaining market share in total online global ad spend in the next fiscal year.

Our take: 2022 has demonstrated Alphabet to be a macro-economic stock rather than a secular growth company. An economic downturn affects Alphabet's earnings. Alphabet’s ad business may face continued pressure in in 2023, but it’s still a leader in the space for its user data collection which optimizes ad placements. If management focuses on reducing operating expenses, it could be a positive catalyst for the stock.

3. Constellation Brands

Analyst take: UBS said Constellation Brands (STZ) can deliver sustainable high single-digit organic revenue growth in beer in the coming years, citing continued innovation of its core brands and improvement despite near-term inflationary pressures. UBS calls STZ “one of the most attractive” names across the beverage universe since it can continue to provide sales growth which UBS said can support earnings-per-share growth.

Our take: Despite an inflationary economy and a more cautious consumer, Constellation’s growth-oriented beverage portfolio — including Corona and other top Mexican beers — has performed well, as consumer demand has held up. We expect STZ to be resilient in a recessionary environment since alcoholic beverages are seen as something people don’t tend to forgo. Also, we see management’s recent corporate governance improvements as a long-term positive for shareholders.

6. Costco

Analyst take: “COST is well-positioned in an inflationary environment as higher-income households [and] existing customers seek bargains,” Cowen said about Costco (COST), which made the firm’s Best Ideas 2023 list. Analysts said the retailer is likely to deliver earnings growth, sales growth and win market share in the near term as customers continue to shop for value.

Our take: Costco is one of the best-run retailers in the world and a great defensive holding in a possible recession. As many consumers are price sensitive in an inflationary economy, Costco offers a deep value proposition to its members, making it an attractive place to shop for cost-saving deals. The company could offer a special dividend and maybe raise memembership fees in 2023.

7. Eli Lilly

Analyst take: JPMorgan has Eli Lilly (LLY) as one of its best ideas for 2023 calling the biopharma company a “best-in-class” growth story poised for further growth in 2023. Analysts say its portfolio of medicines, particularly its new type-2 diabetes drug Mounjaro and its donanemab Alzheimer’s drug can lead to margin expansion beyond 2023. Remember, Mounjaro is in trials to be used as an obesity treatment, too.

Our take: We want to be long-term investors in LLY for the company’s robust lineup of medicines and new drugs in the pipeline, including hopes for regulatory approval of Mounjaro for weight loss and Donanemab for Alzheimer's treatment. However, we want to be price-sensitive too. We want to opportunistically trade in and out of Lilly, and at the current price of $365/share, 43 times 2023 estimated earnings, we think the valuation is a bit uncomfortable.

8. Halliburton

Analyst take: Halliburton (HAL) is a JPMorgan top 2023 pick that’s poised to lead in the energy sector. Halliburton is among several energy stocks that JPMorgan analysts mentioned. They expect the oilfield services provider to benefit from “strong upstream spending growth” as global demand for drilling activity increases. They also anticipate capital return to shareholders to continue in the coming quarters.

Our take: Halliburton is the largest oilfield services provider in North America. In an environment with tight oil and natural gas supply, coupled with underinvestment in oil drilling, the company is well-positioned to grow its earnings. Furthermore, with expenses under control and plenty of pricing power, profit margins should expand.

9. Microsoft

Analyst take: Microsoft (MSFT) is Citi’s top large-cap pick in software under the expectation the tech giant can deliver double-digit percentage growth in calendar year 2023.

Our take: Like our other Big Tech holdings, Microsoft has had a challenging year due to the slower global economy and the strong dollar, but the stock is less risky than its software peers now that the P/E has come down to sub 20s. 

10. Walt Disney

Analyst take: JPMorgan said it likes Walt Disney (DIS) stock long term, seeing strong demand for its parks business despite a weaker economic backdrop.

Our take: Like JPMorgan, we’re long-term investors in Disney because of its valuable franchise. With former CEO Bob Iger back at the helm, we’re anticipating his strategy for its Disney+ strategy next year, as streaming losses have been such a drag on the overall business.

11. Wells Fargo

Analyst take: Raymond James says 2023 will be a volatile year for bank stocks, but that Wells Fargo (WFC) can withstand the pressure because it is levered to interest rates; if rates continue to rise, Wells Fargo’s net interest income, a key revenue driver, should continue to grow, too.

Our take: Wells Fargo has benefitted from higher rates in 2022 and that trend is expected to continue next year, a key part of our investment thesis. Also, Wells is a turnaround story and management still has opportunities to reduce its expense base and improve its efficiency ratio next year. This month’s big settlement with the government over past account scandals could be a final step toward putting the bank’s legal troubles behind it.