Tempus AI
TEM
$52.05
+12.86%
Tempus AI, Inc. is a healthcare technology company that leverages artificial intelligence to unlock and utilize clinical and molecular data, primarily through its Tempus Platform, which aims to make laboratory tests more accurate and personalized. As a pioneer in applying AI to precision medicine, Tempus has established a leading position in the healthcare information services sector, with a focus on oncology and data-driven diagnostics. The company's recent IPO in June 2024 has attracted significant investor attention, but the stock has faced volatility due to its unprofitable status, high valuation, and the broader market's rotation away from high-growth tech stocks. The narrative centers on Tempus's ability to scale its data platform, expand its diagnostics business, and achieve profitability, while managing the risks of high cash burn and competitive pressures.…
TEM
Tempus AI
$52.05
Investment Opinion: Should I buy TEM Today?
Based on the analysis, TEM is rated a 'Buy' with a thesis that its high revenue growth and AI-driven platform justify the premium valuation, but only for investors with a high risk tolerance. The consensus rating is 'Buy' with an average target price of $62.79, implying 36.1% upside. Key supporting data points include: revenue growth of 36.1% YoY, gross margin of 62.7%, improving net margin from -26.6% to -36.2% (though still negative), and a PS ratio of 8.09x, which is below its historical average but above industry peers. The main risks are the lack of profitability, high cash burn, and high volatility. This 'Buy' would be downgraded to 'Hold' if revenue growth decelerates below 20% or if the company needs to raise capital at dilutive terms. The stock is currently overvalued relative to its history and peers, but the premium is justified by its growth potential.
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TEM 12-Month Price Forecast
The AI assessment is neutral with medium confidence. Tempus's growth is solid, but the lack of profitability and high valuation create a balanced risk-reward. The stock could outperform if it achieves profitability faster than expected, but it could also underperform if growth stalls. I would upgrade to bullish if the company shows positive free cash flow or a clear path to profitability, and downgrade to bearish if revenue growth falls below 20% or cash burn accelerates.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Tempus AI's 12-month outlook, with a consensus price target around $62.64 and implied upside of +20.4% versus the current price.
Average Target
$62.64
0 analysts
Implied Upside
+20.4%
vs. current price
Analyst Count
—
covering this stock
Price Range
$35 - $100
Analyst target range
Tempus AI is covered by 14 analysts, with a consensus recommendation of 'Buy' and a mean recommendation score of 2.13 (where 1 is Strong Buy and 5 is Sell). The average target price is $62.79, implying an upside of 36.1% from the current price of $46.12. The target range is wide, from a low of $35.00 to a high of $100.00, indicating high uncertainty about the company's future. The high target of $100 assumes significant growth and margin expansion, while the low target of $35 reflects concerns about cash burn and competitive pressures. Recent ratings from firms like Needham, BTIG, and Morgan Stanley have been positive, with no downgrades, suggesting that analysts remain optimistic about the company's long-term prospects despite the recent stock decline.
Bulls vs Bears: TEM Investment Factors
Tempus AI presents a classic high-growth, high-risk investment. On the bull side, revenue growth is accelerating at 36.1% YoY, gross margins are strong at 62.7%, and analysts see 36.1% upside to the average target. On the bear side, the company is unprofitable, burns cash, carries high debt, and trades at a premium valuation. The most important tension is whether Tempus can achieve profitability before its cash reserves run out or the market loses patience with its high PS ratio. Currently, the bear case has slightly stronger evidence due to the lack of a clear path to profitability and the stock's poor price performance, but the bull case is supported by the company's strategic position in AI-driven healthcare. The stock is a speculative buy for risk-tolerant investors who believe in the long-term potential of precision medicine.
Bullish
- Strong Revenue Growth: Revenue grew 36.1% YoY in Q1 2026 to $348.1M, accelerating from 25% YoY in Q1 2025. This demonstrates robust demand for Tempus's AI-driven diagnostics and data services.
- Improving Profitability: Net loss narrowed to $125.9M in Q1 2026 from $68.0M in Q1 2025, with net margin improving from -26.6% to -36.2% (though still negative). Operating margin also improved to -22.2% from -26.9%.
- High Gross Margin: Gross margin stands at 62.7%, indicating strong pricing power and scalability in the diagnostics business. This provides a solid foundation for future profitability as operating expenses are controlled.
- Analyst Optimism: Consensus rating is 'Buy' with a mean score of 2.13, and the average target price of $62.79 implies 36.1% upside from the current price of $46.12. Recent ratings from Needham, BTIG, and Morgan Stanley are positive.
Bearish
- Persistent Losses: Despite revenue growth, Tempus remains unprofitable with a net loss of $125.9M in Q1 2026. The company has not achieved profitability, and negative free cash flow of $81.5M in Q1 2026 indicates ongoing cash burn.
- High Valuation: PS ratio of 8.09x is significantly above the industry average of 3-5x, implying a premium of 60-170%. This high valuation leaves little room for error and could compress if growth decelerates.
- High Debt and Leverage: Debt-to-equity ratio is 2.70, indicating high leverage. This increases financial risk, especially if the company faces difficulties in refinancing or if interest rates remain elevated.
- Extreme Volatility: Beta of 3.578 means the stock is 3.6 times more volatile than the market. This amplifies downside risk, as seen in the 59.76% max drawdown and the stock trading near its 52-week low.
TEM Technical Analysis
Tempus AI's stock is in a clear downtrend over the past year, with a 1-year price change of -16.9%, and it is currently trading at $46.12, which is only 44.2% of its 52-week range (between $40.77 and $104.32). This positioning near the lower end of the range suggests a bearish sentiment, with the stock having lost significant value from its highs, indicating either a value opportunity or a falling knife, depending on the fundamental outlook. The stock's beta of 3.578 indicates it is significantly more volatile than the market, amplifying both upside and downside moves.
Beta
3.58
3.58x market volatility
Max Drawdown
-59.8%
Largest decline past year
52-Week Range
$41-$104
Price range past year
Annual Return
-11.4%
Cumulative gain past year
| Period | TEM Return | S&P 500 |
|---|---|---|
| 1m | -9.1% | +2.4% |
| 3m | +4.4% | +4.6% |
| 6m | -5.2% | +11.7% |
| 1y | -11.4% | +21.4% |
| ytd | -16.5% | +13.4% |
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TEM Fundamental Analysis
Tempus AI's revenue has been growing strongly, with the most recent quarter (Q1 2026) reporting revenue of $348.1 million, a 36.1% year-over-year increase. This growth is accelerating, as revenue has increased from $255.7 million in Q1 2025 to $348.1 million in Q1 2026, with sequential growth from Q4 2025's $367.2 million. The Diagnostics segment, which generated $261.1 million in Q1 2026, is the primary revenue driver, benefiting from increased adoption of its genomic testing and data services. However, the company remains unprofitable, with a net loss of $125.9 million in Q1 2026, though the net margin improved to -36.2% from -44.6% in the prior year quarter, indicating progress toward profitability. Gross margin is strong at 62.7%, but operating margin is -22.2%, reflecting heavy investments in R&D and sales. The balance sheet shows a debt-to-equity ratio of 2.70, which is high, and the company had negative free cash flow of $81.5 million in Q1 2026, indicating reliance on external financing. However, the current ratio of 3.13 provides liquidity, and the company had $521.2 million in cash at the end of Q1 2026.
Quarterly Revenue
$348116000.0B
2026-03
Revenue YoY Growth
+36.1%
YoY Comparison
Gross Margin
62.7%
Latest Quarter
Free Cash Flow
$-216498000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is TEM Overvalued?
Given Tempus AI's negative net income, the price-to-sales (PS) ratio is the most appropriate valuation metric, and it currently stands at 8.09x trailing, which is high for a company with negative earnings. The forward PE is -3034x, but this is not meaningful due to the negative earnings. The PS ratio of 8.09x is significantly above the industry average for healthcare information services, which typically trades around 3-5x, indicating a premium of 60-170%. This premium is justified by the company's high revenue growth and AI-driven platform, but it also implies high expectations for future profitability. Historically, Tempus's PS ratio has ranged from 21x to 130x, so the current 8.09x is near the lower end of its historical range, suggesting that the stock is relatively cheaper than it has been in the past, but still expensive on an absolute basis.
PE
-41.9x
Latest Quarter
vs. Historical
N/A
5-Year PE Range 17x~59x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
-92.9x
Enterprise Value Multiple
Investment Risk Disclosure
Financial risks are significant. Tempus has a high debt-to-equity ratio of 2.70, indicating substantial leverage. The company's negative free cash flow of $81.5M in Q1 2026 and net loss of $125.9M show it is burning through cash, relying on external financing. With $521.2M in cash, the company has a runway of about 6 quarters at the current burn rate, but this could be shortened if losses widen. The current ratio of 3.13 provides liquidity, but the high leverage and negative earnings make the stock vulnerable to any deterioration in financial conditions.
FAQ
The key risks are: 1) Financial risk: high debt-to-equity of 2.70 and negative free cash flow of $81.5M in Q1 2026, which could lead to dilution or liquidity issues. 2) Competitive risk: the healthcare information services market is competitive, and larger players could undercut Tempus. 3) Macro risk: the stock's beta of 3.578 makes it highly sensitive to market downturns. 4) Company-specific risk: the company's unprofitability and reliance on continued growth to justify its valuation. The most severe risk is a combination of slowing growth and rising interest rates, which could lead to a significant de-rating.
The 12-month forecast is mixed. The bull case (25% probability) sees the stock reaching $70-100, driven by strong growth and profitability progress. The base case (50% probability) sees the stock trading around $50-65, in line with the analyst average target of $62.79. The bear case (25% probability) sees the stock falling to $35-45, near the 52-week low, if growth decelerates or cash burn worsens. The most likely scenario is the base case, assuming revenue growth remains above 25% and the company continues to improve margins.
TEM is overvalued relative to its industry peers, with a PS ratio of 8.09x versus the industry average of 3-5x. However, it is undervalued relative to its own history, as the PS ratio has ranged from 21x to 130x in the past. The market is pricing in high growth and future profitability, which is justified by the company's strong revenue growth but not by its current earnings. The valuation implies that investors expect the company to achieve significant margin expansion and become profitable in the next few years.
TEM is a good buy for investors who believe in the long-term potential of AI in healthcare and can tolerate high volatility. The stock offers 36.1% upside to the average analyst target of $62.79, but the downside risk is significant, with the 52-week low at $40.77. The company's revenue growth of 36.1% YoY is impressive, but it is still unprofitable and burns cash. A good buy for aggressive growth investors, but not for conservative investors.
TEM is more suitable for long-term investment, given its high growth potential and the long-term trend of AI in healthcare. The stock is extremely volatile (beta 3.578), which makes it risky for short-term trading. The company is still in its growth phase, and it may take several years to achieve profitability. A minimum holding period of 3-5 years is recommended to allow the company to execute its strategy and for the market to recognize its value. Short-term traders could profit from volatility, but the risk is high.