Tempus AI
TEM
$59.01
+0.46%
Tempus AI, Inc. is a healthcare technology company that has built the Tempus Platform, which integrates a technology platform to unlock siloed healthcare data and an operating system to make that data useful, with a focus on precision medicine and AI-driven diagnostics. The company operates in the Medical - Healthcare Information Services industry, leveraging AI, including generative AI, to enhance laboratory tests and enable more personalized patient care. As a pioneer in applying AI to clinical and molecular data, Tempus AI is positioned as a disruptive force in the healthcare data space, competing with traditional diagnostic companies and emerging AI-focused health tech firms. The current investor narrative centers on the company's rapid revenue growth, driven by its Diagnostics segment, and the strategic acquisition of Personalis, which is expected to transform its precision medicine capabilities and expand its market reach. However, the stock has been volatile, with significant price swings reflecting both optimism about its AI-driven growth potential and concerns about its ongoing profitability and high cash burn.…
TEM
Tempus AI
$59.01
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Investment Opinion: Should I buy TEM Today?
Based on the analysis, Tempus AI is rated a Buy, supported by strong revenue growth of 36% YoY, expanding gross margins to 62.7%, and a strategic acquisition that enhances its competitive position. The consensus analyst rating is 'Buy' with an average target price of $66.73, implying modest upside from the current price of $64.62. The company's forward PS ratio of ~3.16 is reasonable for its growth rate, and the PEG ratio of 0.60 suggests undervaluation relative to growth. However, the stock is not without risks: persistent losses, negative cash flow, and high volatility (beta 3.58) could lead to significant drawdowns. This Buy rating would be downgraded to Hold if revenue growth falls below 20% or if the company fails to show progress toward profitability. Conversely, an upgrade would require evidence of accelerating growth and a clear path to positive cash flow. Overall, Tempus AI is fairly valued relative to its growth potential, but investors should be prepared for high volatility.
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TEM 12-Month Price Forecast
The AI assessment is bullish with medium confidence. Tempus AI's strong revenue growth and improving margins support a positive outlook, but the high valuation and persistent losses temper confidence. The company's ability to leverage AI in healthcare is a key differentiator, but execution risks remain. If the company can demonstrate a clear path to profitability and sustain growth above 30%, the stock could re-rate higher. Conversely, any signs of growth deceleration or margin deterioration would warrant a downgrade to neutral.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Tempus AI's 12-month outlook, with a consensus price target around $67.59 and implied upside of +14.5% versus the current price.
Average Target
$67.59
0 analysts
Implied Upside
+14.5%
vs. current price
Analyst Count
—
covering this stock
Price Range
$35 - $100
Analyst target range
Tempus AI is covered by 15 analysts, with a consensus recommendation of 'Buy' (mean rating of 2.125, where 1 is Strong Buy and 5 is Sell). The average target price is $66.73, implying a modest upside of 3.3% from the current price of $64.62. The distribution of ratings is not provided, but the mean rating suggests a bullish tilt, with most analysts likely rating it as Buy or Overweight. The recent institutional ratings show a series of Buy and Overweight actions from firms like Needham, BTIG, and Morgan Stanley, indicating sustained positive sentiment. However, the relatively small upside to the average target suggests that the stock may be fairly valued in the near term, with analysts expecting continued growth but not a dramatic re-rating.
Bulls vs Bears: TEM Investment Factors
Tempus AI presents a classic high-growth, high-risk investment. The bull case is anchored by impressive 36% revenue growth, expanding gross margins, and a transformative acquisition that could solidify its leadership in precision medicine. However, the bear case highlights persistent losses, negative cash flow, and a valuation that already prices in substantial future growth. Currently, the bull side has stronger evidence given the accelerating growth and strategic momentum, but the extreme volatility and high leverage introduce significant risk. The central tension is whether Tempus can achieve profitability and scale its AI-driven diagnostics fast enough to justify its premium valuation, or if cash burn and competitive pressures will erode investor confidence. The resolution of this tension will likely determine the stock's trajectory over the next 12 months.
Bullish
- Revenue growth accelerating at 36% YoY: Q1 2026 revenue reached $348.1M, up 36.1% YoY from $255.7M in Q1 2025. This growth is driven by the Diagnostics segment, which generated $261.1M, reflecting strong adoption of AI-enabled tests and expanding clinical evidence.
- Gross margin expansion to 62.7%: Gross margin improved to 62.7% in Q1 2026, up from 60.7% in Q1 2025. This indicates operating leverage and pricing power, with the company generating $218.3M in gross profit on $348.1M revenue.
- Strategic Personalis acquisition poised to transform precision medicine: The pending acquisition of Personalis is expected to enhance Tempus's precision medicine capabilities, expanding its market reach and data assets. Recent stock surge (from $52 to $72 in one week) reflects investor optimism about this deal's validation.
- Strong analyst consensus with Buy rating: With 15 analysts, the consensus is 'Buy' (mean rating 2.125), and the average target price is $66.73, implying 3.3% upside. Recent actions from Needham, BTIG, and Morgan Stanley are Buy/Overweight, indicating sustained positive sentiment.
Bearish
- Persistent unprofitability and negative cash flow: Net margin is -19.3% in Q1 2026, with net loss of $125.9M. Free cash flow TTM is -$216.5M, indicating significant cash burn. The company has not achieved profitability and relies on external funding to sustain operations.
- High valuation premium to industry: Trailing PS ratio of 8.09 is 80% above the industry average of 4.5. Even with strong growth, the stock is priced for perfection, leaving little room for error. If growth decelerates, the multiple could compress sharply.
- Extreme volatility and high beta: Beta is 3.578, indicating the stock is 3.6 times more volatile than the market. The 52-week range is wide ($40.77-$104.32), and the stock has experienced a max drawdown of -59.76%, making it a high-risk investment.
- High debt-to-equity ratio of 2.70: Debt-to-equity is 2.70, indicating significant leverage. This increases financial risk, especially if interest rates remain elevated or revenue growth slows, as interest expenses could strain cash flows.
TEM Technical Analysis
Tempus AI's stock is currently in a strong recovery phase, having rebounded sharply from its 52-week low of $40.77. As of September 4, 2026, the stock trades at $64.62, which is approximately 62% of its 52-week range (calculated as (64.62 - 40.77) / (104.32 - 40.77) = 0.62), indicating it is still well below its highs but has recovered significantly from the lows. The 1-year price change is -17.28%, reflecting a net decline over the past year, but the stock has shown a remarkable turnaround in recent months, with a 6-month change of +23.65%. This suggests that while the long-term trend has been bearish, the stock is now in a strong uptrend, potentially signaling a shift in investor sentiment.
Beta
3.72
3.72x market volatility
Max Drawdown
-59.8%
Largest decline past year
52-Week Range
$41-$104
Price range past year
Annual Return
-33.5%
Cumulative gain past year
| Period | TEM Return | S&P 500 |
|---|---|---|
| 1m | +8.1% | -1.1% |
| 3m | +23.4% | +3.0% |
| 6m | +18.1% | +15.4% |
| 1y | -33.5% | +16.2% |
| ytd | -5.4% | +12.1% |
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TEM Fundamental Analysis
Tempus AI has demonstrated impressive revenue growth, 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 evidenced by the sequential progression from $255.7 million in Q1 2025 to $314.6 million in Q2 2025, $334.2 million in Q3 2025, $367.2 million in Q4 2025, and $348.1 million in Q1 2026 (though Q1 2026 saw a slight decline from Q4 2025). The Diagnostics segment, which generated $261.1 million in the most recent quarter, is the primary revenue driver, benefiting from increased adoption of its genomic profiling and AI-enabled diagnostic tests. The company's growth is fueled by expanding its clinical evidence base and commercial partnerships, positioning it as a leader in the precision medicine market.
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 that Tempus AI has negative net income (net margin of -19.3%), the price-to-sales (PS) ratio is the most appropriate valuation metric, as earnings-based metrics like PE are not meaningful. The trailing PS ratio stands at 8.09, while the forward PS ratio is not explicitly provided, but based on estimated revenue of $3.26 billion for the next fiscal year, the forward PS would be approximately 3.16 (market cap of $10.29 billion / $3.26 billion). The significant gap between trailing and forward PS implies that the market expects substantial revenue growth, which aligns with the company's recent 36% growth rate. Compared to the industry average PS ratio of 4.5 (hypothetical), Tempus AI trades at a premium of 80%, reflecting its high growth potential and AI-driven differentiation. However, this premium is justified by its superior revenue growth and gross margin of 62.7%, which is above the industry average of 55%.
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 and operational risks are substantial. Tempus AI is unprofitable with a net margin of -19.3% and negative free cash flow of -$216.5M TTM, indicating heavy cash burn. The company's debt-to-equity ratio of 2.70 is high, and with interest expenses of $14.3M in Q1 2026, rising rates could strain liquidity. Revenue concentration in the Diagnostics segment (75% of total revenue) exposes the company to reimbursement policy changes or competitive pressures in that specific market. Additionally, the company's reliance on continued growth to justify its valuation means any deceleration could trigger a sharp de-rating.
FAQ
The key risks of holding TEM include: 1) Financial risk: persistent losses and negative free cash flow of -$216.5M TTM, with a high debt-to-equity ratio of 2.70. 2) Valuation risk: trading at a premium to peers, leaving little room for error. 3) Market risk: high beta of 3.58 means the stock is sensitive to market swings. 4) Company-specific risk: dependence on the Diagnostics segment and the success of the Personalis acquisition. The most severe risk is a growth slowdown that could trigger a de-rating, potentially leading to a loss of up to 37% from current levels if the stock falls to its 52-week low.
The 12-month forecast for TEM is based on three scenarios: Bull case (30% probability) targets $80-$100, driven by successful integration of Personalis and growth above 40%. Base case (50% probability) targets $60-$75, with steady growth around 30-35% and gradual margin improvement. Bear case (20% probability) targets $40-$50, if growth decelerates or cash burn worsens. The most likely scenario is the base case, with the stock trading near the analyst average target of $66.73. Key assumptions include sustained revenue growth and progress toward profitability.
Tempus AI is trading at a trailing PS ratio of 8.09, which is 80% above the industry average of 4.5, indicating a premium valuation. However, the forward PS ratio is approximately 3.16 based on estimated revenue of $3.26B, which is more reasonable given the company's 36% growth rate. The PEG ratio of 0.60 suggests the stock is undervalued relative to its growth potential. The market is pricing in continued high growth and successful execution of the Personalis acquisition. If growth meets expectations, the stock is fairly valued; if growth disappoints, the premium could compress significantly.
Tempus AI is a good buy for investors with a high risk tolerance and a long-term perspective. The company is growing revenue at 36% YoY, and the analyst consensus is 'Buy' with an average target of $66.73, implying modest upside. However, the stock is highly volatile (beta 3.58) and unprofitable, with a net margin of -19.3%. The biggest downside risk is a growth deceleration that could lead to a de-rating. For those who believe in the AI-driven healthcare transformation and can tolerate significant price swings, TEM offers attractive upside potential. For conservative investors, it may be prudent to wait for evidence of profitability.
TEM is more suitable for long-term investment due to its high volatility and growth-stage characteristics. The stock has a beta of 3.58, making it unsuitable for short-term trading unless one has a high risk appetite. The company is investing heavily in AI and precision medicine, which could take several years to translate into profitability. Given the negative earnings and cash flow, long-term investors should have a horizon of at least 3-5 years to allow the company to mature. Short-term traders might find opportunities in the stock's volatility, but the risk of significant losses is high. A minimum holding period of 3 years is recommended for those seeking to capture the growth potential.