Tempus AI
TEM
$42.94
-2.76%
Tempus AI is a technology company operating in the healthcare information services industry, focused on building a platform to liberate and operationalize clinical and molecular data through artificial intelligence. The company positions itself as a disruptor in the precision medicine space, leveraging its proprietary Tempus Platform and AI-driven Intelligent Diagnostics to make laboratory testing more accurate and personalized. The current investor narrative revolves around the company's ability to scale its data-centric healthcare model and achieve profitability, with significant attention on its rapid revenue growth, as evidenced by its recent quarterly figures, and the ongoing debate about its path to sustainable cash generation given its current losses and substantial cash burn.…
TEM
Tempus AI
$42.94
Investment Opinion: Should I buy TEM Today?
Rating: Hold. The core thesis is that Tempus AI is a compelling but unproven growth story trading at a compressed valuation, where the risk of further capital destruction balances the potential for a dramatic turnaround, making it suitable only for high-risk, long-term investors.
Supporting evidence includes the stock's 59% discount to its 52-week high and its proximity to the 52-week low, suggesting significant negative sentiment is priced in. The bullish analyst consensus (5 Buys) and projected EPS of $3.34 signal a strong expected fundamental inflection. However, this is counterbalanced by a trailing PS of 8.09x, which is not cheap for a company with -$404M in FCF, and a net margin of -14.75%, indicating profitability is still distant.
The thesis would upgrade to a Buy if the company demonstrates two consecutive quarters of sustained gross margin above 75% and provides clear guidance that cuts the quarterly cash burn by at least 50%. It would downgrade to a Sell if revenue growth decelerates below 50% YoY or if the company announces a dilutive equity offering above a 10% share count increase. Relative to its own inflated history, the stock is fairly valued, but relative to the stringent requirements of profitable growth, it remains overvalued until it proves its economic model.
Sign up to view all
TEM 12-Month Price Forecast
The investment case for TEM is balanced on a knife's edge between transformative growth and financial distress. The explosive revenue growth and analyst optimism provide a clear bull narrative, but the catastrophic cash burn and severe technical breakdown cannot be ignored. The neutral stance reflects the high probability of volatile, range-bound trading (base case) as the market waits for conclusive proof on margins and cash flow. Confidence is medium due to the extreme volatility in key metrics. The stance would upgrade to bullish on evidence of sustainable margin expansion and a credible plan to fund growth without excessive dilution. It would downgrade to bearish on a material growth slowdown or a dilutive capital raise.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Tempus AI's 12-month outlook, with a consensus price target around $55.82 and implied upside of +30.0% versus the current price.
Average Target
$55.82
5 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
5
covering this stock
Price Range
$34 - $56
Analyst target range
Tempus AI is covered by 5 analysts, and the institutional sentiment, as reflected in recent ratings, is predominantly bullish, with firms like Guggenheim, Needham, HC Wainwright, Morgan Stanley, and BTIG maintaining 'Buy' or 'Overweight' ratings, while JP Morgan holds a 'Neutral' stance. The consensus estimates point to significant future improvement, with an average EPS forecast of $3.34 for the coming period on expected revenue of ~$3.16 billion, indicating analysts project a substantial turnaround towards profitability from the current losses. The target price range implied by earnings estimates is wide, with a low EPS of $3.22 and a high of $3.52, reflecting uncertainty around the timing and magnitude of the projected profitability inflection; this wide spread is typical for a pre-profitability, high-growth story where execution on margin expansion is the key variable, and the lack of explicit price targets in the data suggests analysts are focused on modeling the fundamental turnaround rather than near-term price action.
Bulls vs Bears: TEM Investment Factors
The evidence presents a stark dichotomy: explosive top-line growth and improving margins against a backdrop of severe cash burn, persistent losses, and catastrophic price action. Currently, the bear case has stronger near-term evidence, as the market is punishing the stock for its lack of profitability and high cash burn despite strong revenue. The single most important tension in the investment debate is the timing and credibility of the path to sustainable free cash flow generation. If the company can demonstrate a clear, funded roadmap to profitability, the compressed valuation offers significant upside. If cash burn continues unabated or growth decelerates, the stock risks further re-rating downward.
Bullish
- Explosive Revenue Growth: Q4 2025 revenue of $367.2 million grew 82.98% YoY, accelerating from Q3's $334.2 million. This demonstrates strong platform adoption and validates the core growth thesis in precision medicine.
- Dramatic Margin Improvement: Gross margin surged to 89.74% in Q4 from 61.61% in Q3, while the net loss margin improved to -14.75% from -23.93%. This suggests a favorable revenue mix shift and potential for operating leverage.
- Analyst Consensus Bullish on Profitability: All 5 covering analysts have a Buy or Overweight rating, with a consensus EPS forecast of $3.34 for the coming period on ~$3.16B revenue. This projects a significant inflection from current losses to substantial profitability.
- Valuation Compressed from Extremes: The trailing PS ratio has collapsed from 28.02x at the end of Q4 2025 to the current 8.09x. Trading 59% below its 52-week high and near its 52-week low, much of the previous growth optimism has been priced out.
Bearish
- Massive Cash Burn: Trailing twelve-month free cash flow is -$404.0 million, indicating the company is consuming capital at an unsustainable rate to fund growth. This necessitates future dilutive financing or debt issuance.
- Persistent, Deep Unprofitability: The company reported a Q4 2025 net loss of $54.2 million, with a net margin of -14.75%. Despite improvement, profitability remains elusive, and the forward PE of -687.6x reflects extreme uncertainty.
- Severe Technical Downtrend: The stock is down 55.45% over six months and 35.20% over three months, with a -18.95% relative strength vs. the S&P 500 over the past month. This indicates intense, company-specific selling pressure and a lack of near-term catalysts.
- High Short Interest & Debt: A short interest ratio of 4.48 shows significant bets on further decline. Combined with a debt-to-equity ratio of 1.66, this creates financial risk and potential for a volatile squeeze if sentiment doesn't improve.
TEM Technical Analysis
The prevailing price trend for Tempus AI is a pronounced and sustained downtrend, with the stock down 55.45% over the past six months and 35.20% over the last three months. The current price of $42.94 sits near the bottom of its 52-week range, trading at approximately 10% above its 52-week low of $38.79 and 59% below its 52-week high of $104.32, indicating the stock is deeply oversold and may represent a value opportunity, though it carries significant 'falling knife' risk amid persistent negative momentum. Recent short-term momentum shows no signs of reversal, with the stock declining 18.49% over the past month, which sharply contrasts with the S&P 500's gain of 0.46% over the same period, resulting in a severe relative strength reading of -18.95; this divergence from the broader market underscores intense, company-specific selling pressure and a lack of near-term catalysts. Key technical support is clearly defined at the 52-week low of $38.79, while resistance lies at the 52-week high of $104.32; a breakdown below $38.79 would signal a new phase of technical weakness, whereas any sustained move above this downtrend would require a fundamental catalyst, and the stock's high short interest ratio of 4.48 suggests a significant portion of the market is betting on further declines, which could fuel a sharp rally on any positive news.
Beta
—
—
Max Drawdown
-59.0%
Largest decline past year
52-Week Range
$39-$104
Price range past year
Annual Return
+6.6%
Cumulative gain past year
| Period | TEM Return | S&P 500 |
|---|---|---|
| 1m | -18.5% | +2.6% |
| 3m | -35.2% | -2.3% |
| 6m | -55.5% | +2.6% |
| 1y | +6.6% | +27.3% |
| ytd | -31.1% | -0.4% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
TEM Fundamental Analysis
Tempus AI exhibits a robust revenue growth trajectory, with Q4 2025 revenue of $367.2 million representing a staggering 82.98% year-over-year increase, and sequential growth from Q3's $334.2 million; this acceleration is a core pillar of the investment thesis, suggesting strong adoption of its platform and diagnostic services. However, the company remains deeply unprofitable, with a Q4 2025 net loss of $54.2 million and a net margin of -14.75%, though this represents a significant improvement from the -23.93% net margin in Q3 2025; gross margins are highly variable, jumping to 89.74% in Q4 from 61.61% in Q3, which may indicate a favorable revenue mix shift but requires monitoring for sustainability. The balance sheet and cash flow situation presents a critical challenge, with a trailing twelve-month free cash flow of -$404.0 million, a debt-to-equity ratio of 1.66, and a current ratio of 3.13; while the company maintains a solid liquidity position, the substantial cash burn necessitates external financing to fund growth, elevating financial risk despite the strong revenue growth.
Quarterly Revenue
$367211000.0B
2025-12
Revenue YoY Growth
+0.82%
YoY Comparison
Gross Margin
+0.89%
Latest Quarter
Free Cash Flow
$-403985000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Open an Account, get $2 TSLA now!
Valuation Analysis: Is TEM Overvalued?
Given the company's negative net income, the primary valuation metric selected is the Price-to-Sales (PS) ratio. Tempus AI trades at a trailing PS ratio of 8.09x and an EV/Sales ratio of 6.66x, which are not directly comparable to a provided industry average, but the forward-looking estimates imply a sales multiple based on expected 2026 revenue of ~$3.16 billion. The stock's valuation must be assessed in the context of its hyper-growth profile and significant losses; any premium would be justified only by sustained, high-double-digit revenue expansion and a credible path to profitability. Historically, the stock's own valuation has compressed dramatically from extreme levels, with its trailing PS ratio falling from 28.02x at the end of Q4 2025 to the current 8.09x; this places the valuation near the lower end of its observable historical range, suggesting the market has priced out much of its previous growth optimism and is now demanding proof of economic viability.
PE
-42.0x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range -105x~0x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
-47.2x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks are severe and center on cash sustainability. With TTM FCF of -$404 million, the company is burning cash at a rate that demands external capital, risking dilution or increased leverage from its already elevated 1.66 debt-to-equity ratio. While revenue grew 83% YoY, profitability remains deeply negative with a -14.75% net margin, making the company dependent on perpetual high growth to justify its valuation. The extreme volatility in gross margin (from 61.6% to 89.7% in one quarter) also introduces uncertainty into future earnings projections.
Market & Competitive Risks are heightened by the stock's technical collapse and premium valuation. Despite the recent plunge, the stock trades at a trailing PS of 8.09x, which, while down from 28x, is still a premium for an unprofitable company and remains vulnerable to further compression if growth slows. The stock has demonstrated extreme market sensitivity, with a -59.5% relative strength over six months versus the S&P 500, indicating it is being treated as a high-risk, speculative asset. Competitive and regulatory pressures in the healthcare AI and diagnostics space could further impede the path to scale and profitability.
Worst-Case Scenario involves a 'growth stall' combined with a financing crisis. If revenue growth decelerates sharply from the current 80%+ level while cash burn remains high, the company could face difficulty raising capital on favorable terms, triggering a liquidity crunch. This could force drastic cost-cutting, impairing growth, and lead to a loss of investor confidence. In this adverse scenario, the stock could realistically revisit and break below its 52-week low of $38.79, implying a further downside of approximately -10% from the current price of $42.94, with potential for a larger decline towards its all-time lows if the fundamental thesis unravels.
FAQ
The key risks are, in order of severity: 1) Financial Risk: A TTM cash burn of -$404M necessitates future financing, risking dilution. 2) Profitability Risk: Despite 83% revenue growth, the net margin is -14.75%, with no guarantee of reaching analyst-projected profits. 3) Execution Risk: The extreme volatility in gross margin (61.6% to 89.7%) indicates business model uncertainty. 4) Market Risk: The stock has shown -59.5% relative strength over six months, indicating it is prone to severe sell-offs on negative sentiment.
The 12-month forecast is bifurcated. The base case (50% probability) sees the stock trading between $55 and $75 as growth moderates and cash burn slowly improves. The bull case (25% probability) projects a rally to $85-$104 on sustained margin expansion and profitability progress. The bear case (25% probability) warns of a drop to $38-$50 if growth stalls and cash burn forces dilution. The most likely outcome is the base case, hinging on the assumption that revenue growth remains above 50% without a margin collapse.
TEM's valuation is ambiguous. At a trailing PS of 8.09x, it is far cheaper than its historical 28x multiple, suggesting it is undervalued relative to its own past. However, for an unprofitable company burning over $400M annually, this multiple is not necessarily cheap. The market is currently valuing it as a 'show me' story, paying a moderate premium for hyper-growth but demanding proof of future profits. It is fairly valued given the current high-risk, high-reward profile.
TEM is a speculative buy only for investors with a high risk tolerance and a long-term horizon. The 59% decline from its high and bullish analyst targets suggest significant upside potential if the company executes its turnaround. However, the massive -$404M cash burn and persistent losses pose a substantial risk of further capital loss. It could be a good buy for those who believe in the long-term AI+healthcare thesis and can withstand volatility, but it is not suitable for conservative portfolios.
TEM is strictly a long-term investment with a minimum suggested holding period of 3-5 years. The company is in a pre-profitability, capital-intensive growth phase where short-term price movements (down 55% in 6 months) are driven by sentiment and liquidity, not fundamentals. The investment thesis relies on the company achieving scale and profitability, which will take multiple years. Its high beta, zero dividend, and earnings volatility make it unsuitable for short-term trading or income-seeking investors.