Tempus AI
TEM
$72.15
+7.43%
Tempus AI operates a technology platform that frees healthcare data from silos and layers an AI-enabled operating system on top of it, monetizing primarily through next-generation sequencing-based diagnostics (the Diagnostics segment generated roughly $289 million of the most recent quarterly revenue) alongside data licensing and services to pharma and health systems. The company positions itself as a platform play at the intersection of precision medicine and artificial intelligence, differentiating itself through a massive multimodal clinical and molecular dataset that it argues becomes more valuable with scale and with each new diagnostic test ordered. The current investor narrative is dominated by the pending Personalis acquisition, which bulls view as a transformative validation of Tempus's precision-oncology roadmap and which catalyzed a sharp August rally in the shares. That enthusiasm is being weighed against a still-unprofitable P&L, heavy stock-based compensation, and a deeply negative trailing free cash flow profile, making TEM a high-conviction growth-versus-profitability debate rather than a consensus compounder.…
TEM
Tempus AI
$72.15
Related headlines
Investment Opinion: Should I buy TEM Today?
Rating: Hold. The core thesis is that Tempus AI offers a scarce platform asset in precision medicine and AI-driven diagnostics, but the current valuation (8.1x PS) already reflects substantial growth expectations while the company remains unprofitable and cash-flow negative. The analyst consensus is 'buy' with an average target of $74.94, implying 10.8% upside, but the wide target range ($35-$100) signals high uncertainty. We recommend a Hold until there is clearer evidence of operating leverage and cash flow inflection.
Supporting evidence: Revenue grew 21.6% YoY to $382.5 million in Q2 2026, with gross margin expanding to 64.45% from 60.69% a year earlier. However, operating margin remains deeply negative at -19.9%, and trailing free cash flow is -$273.0 million. The PS ratio of 8.1x is below the historical average but still at a premium to mature health-IT peers, while the PEG ratio of 0.60 suggests the stock may be undervalued relative to expected growth if forward EPS estimates of $2.88 are achieved. The balance sheet is strong with $604.3 million in cash and a current ratio of 3.13, providing runway.
Risks and conditions: The biggest risks are persistent cash burn, decelerating revenue growth, and integration risk from the Personalis acquisition. This Hold would upgrade to Buy if operating cash flow turns sustainably positive or if revenue growth re-accelerates above 30% with margin expansion. It would downgrade to Sell if free cash flow burn exceeds $300 million annually or if the Personalis deal fails to close. Valuation verdict: fairly valued relative to its growth prospects, but with a high degree of uncertainty; the stock is not cheap on current fundamentals but could be undervalued if the growth story materializes.
Sign up to view all
TEM 12-Month Price Forecast
Tempus AI presents a balanced risk/reward at current levels. The bull case hinges on the Personalis acquisition re-accelerating growth and driving operating leverage, while the bear case focuses on persistent cash burn and decelerating revenue. The valuation at 8.1x sales is not demanding relative to history but still requires execution. We would upgrade to bullish if operating cash flow turns positive or revenue growth re-accelerates above 30%, and downgrade to bearish if cash burn accelerates or the Personalis deal falls through.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Tempus AI's 12-month outlook, with a consensus price target around $75.06 and implied upside of +4.0% versus the current price.
Average Target
$75.06
0 analysts
Implied Upside
+4.0%
vs. current price
Analyst Count
—
covering this stock
Price Range
$35 - $100
Analyst target range
Coverage is solid for a company listed only in June 2024, with 18 analysts and a consensus recommendation of "buy" (mean rating 2.2 on a scale where lower is more bullish). The average target price of $74.94 implies roughly +10.8% upside from the current $67.615, a modest but positive signal that suggests the Street sees the recent pullback as a buying opportunity rather than the start of a deeper de-rating. The bullish tilt is reinforced by recent actions: Piper Sandler upgraded to Overweight from Neutral on September 1, 2026, while HC Wainwright, BTIG, and Needham have maintained Buy ratings through the summer.
The target range of $35.00 to $100.00 is extremely wide — a nearly 3x spread — which signals high uncertainty and genuine disagreement about the Personalis acquisition, the path to profitability, and the durability of data-licensing revenue. The $100 high target assumes successful integration of Personalis, re-accelerating diagnostics growth, and multiple expansion back toward prior peak sales multiples, while the $35 low target prices in margin compression, cash burn persistence, and a failure to convert the AI narrative into earnings. The dispersion, combined with a beta of 3.54 and a short ratio of 3.69, means analyst targets should be treated as scenario markers rather than precise price forecasts; conviction is directional (bullish) but not tight, and the stock is likely to remain headline-driven around deal news and quarterly cash-flow prints.
Bulls vs Bears: TEM Investment Factors
The bull case rests on the transformative potential of the Personalis acquisition, sustained gross margin expansion to 64.45%, and a valuation that has compressed to 8.1x sales from over 50x two years ago. The bear case is anchored in persistent cash burn (-$273M TTM FCF), decelerating revenue growth (21.6% vs. 37% prior quarter), and an operating loss of -$75.9M that shows no signs of closing. Currently, the bear evidence on profitability and cash generation is more concrete and quantifiable, while the bull case depends heavily on successful M&A integration and future re-acceleration. The single most important tension is whether the Personalis deal can reignite growth and drive the company to sustainable operating profitability before cash reserves are depleted — a resolution that will likely determine whether the stock retests its $93 high or its $41 low.
Bullish
- Personalis deal validates precision-oncology platform: The pending Personalis acquisition is the key catalyst behind the 58.4% three-month rally, with news flow explicitly citing the deal as transformative for Tempus's precision medicine business. If integrated successfully, it expands oncology testing content and could re-accelerate revenue growth above the current 21.6% YoY pace.
- Gross margin expansion is real and sustained: Gross margin has climbed from 60.69% in Q1 2025 to 64.45% in Q2 2026, a roughly 376 basis point improvement over five quarters. This demonstrates operating leverage at the unit economics level even as the company continues to invest heavily in R&D and SG&A.
- Valuation has compressed to historical lows: The PS multiple has fallen from 51.8x in Q3 2024 to 8.1x today, placing the stock near the bottom of its own valuation band. While partly mechanical, this de-rating means the market is pricing far less speculative optimism than it did a year ago, limiting further multiple compression risk.
- Strong balance sheet provides runway: With $604.3 million in cash and a current ratio of 3.13, Tempus has ample liquidity to fund operations and integrate Personalis without immediate dilution risk. This is critical for a company burning $273.0 million in trailing free cash flow.
Bearish
- Cash burn remains deeply negative: Trailing free cash flow is -$273.0 million, and Q2 operating cash flow was -$7.5 million after Q1's -$73.3 million outflow. Despite a $5.6 million net profit in Q2, the company is not generating cash, and stock-based compensation of $54.1 million flatters the cash flow picture.
- Operating losses persist despite gross margin gains: Q2 2026 operating income was -$75.9 million (-19.9% margin) as R&D of $96.6 million and SG&A of $225.8 million consumed gross profit. The Q2 net profit was entirely due to $81.9 million of net other income, not operating leverage.
- Revenue growth is decelerating: Q2 2026 revenue growth of 21.6% YoY decelerated from roughly 37% in Q1 2026 ($348.1M vs. $255.7M). The sequential cadence ($348.1M to $382.5M) shows steady but not accelerating expansion, which is a concern for a stock priced at 8.1x sales.
- Extreme volatility and high beta: Beta of 3.54 means the stock is 3.5x as volatile as the S&P 500, with a max drawdown of -59.76%. The stock is down 11.7% over the past month versus a 58.4% gain over three months, illustrating violent swings that can erase gains quickly.
TEM Technical Analysis
Tempus AI is in a volatile recovery phase within a broader one-year downtrend: the stock is down 22.31% over the trailing year yet has rallied 58.39% over the past three months, and at $67.615 it sits at roughly 50.9% of its 52-week range of $40.77 to $93.38. That mid-range positioning reflects a market that has repriced the name sharply higher off the lows but has not yet reclaimed the highs, leaving the stock in a contested zone where both momentum buyers and profit-takers have a case. The 52-week high of $93.38 remains about 38% above the current price, while the 52-week low of $40.77 is roughly 40% below, underscoring how wide the battlefield is.
Short-term momentum has decelerated sharply even as the intermediate trend stays positive: the stock is down 11.72% over the past month versus a 58.39% gain over three months, a clear divergence that signals the August-September advance is being digested rather than extended. Relative strength tells the same story — TEM has outperformed SPY by 55.54 percentage points over three months but underperformed by 10.70 points over the past month, with the one-year relative strength at -35.44 points. The most recent session did show a 5.96% bounce to $67.615 on volume of about 4.68 million shares, suggesting buyers are defending the mid-$60s, but the pattern of lower highs since the late-September peak near $85 argues for caution until that sequence breaks.
Key technical levels are well defined: support clusters at the $63-$64 area (recent October lows) and, more meaningfully, the $40.77 52-week low, while resistance sits at the $85.01-$85.08 double top from late September and then the $93.38 52-week high. A breakout above $85 would signal a resumption of the primary uptrend and likely open a test of the highs, whereas a breakdown below $63 would confirm the short-term downtrend and put the $52-$55 August breakout zone in play. With a beta of 3.54, TEM is roughly 3.5x as volatile as the S&P 500 and has suffered a max drawdown of -59.76%, meaning position sizing must account for violent 20-30% swings within weeks — this is a name where stop discipline and smaller sizing matter far more than in a market-beta instrument.
Beta
3.54
3.54x market volatility
Max Drawdown
-59.8%
Largest decline past year
52-Week Range
$41-$92
Price range past year
Annual Return
-21.2%
Cumulative gain past year
| Period | TEM Return | S&P 500 |
|---|---|---|
| 1m | -15.1% | -0.2% |
| 3m | +73.6% | +5.5% |
| 6m | +30.0% | +7.1% |
| 1y | -21.2% | +12.3% |
| ytd | +15.7% | +12.9% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
TEM Fundamental Analysis
Revenue is growing briskly but the growth rate is moderating: Q2 2026 revenue of $382.49 million rose 21.56% year over year, a deceleration from the roughly 37% implied by Q1 2026's $348.12 million versus Q1 2025's $255.74 million, and the sequential cadence ($348.1M → $382.5M) shows steady but not accelerating expansion. The Diagnostics segment at $289.33 million is the dominant revenue engine, and the pending Personalis acquisition is the key swing factor that could re-accelerate the top line through expanded oncology testing content. For the investment case, the deceleration matters less than durability — consensus revenue of roughly $3.25 billion implies continued double-digit-plus growth, but the market is paying for a re-acceleration story tied to M&A and data licensing rather than the current run-rate alone.
Profitability is thin and inconsistent: Q2 2026 produced net income of $5.64 million (a 1.48% net margin) and EPS of $0.03, a genuine swing to profit from Q1 2026's -$125.92 million loss and -$0.71 EPS, but that swing was heavily aided by $81.86 million of net other income rather than operating leverage. Operating income remained negative at -$75.91 million (-19.85% operating margin) despite a healthy 64.45% gross margin, with R&D of $96.57 million and SG&A of $225.85 million consuming the gross profit. Gross margin has improved steadily from 60.69% in Q1 2025 to 64.45% in Q2 2026, which is the most encouraging fundamental datapoint, but the gap between gross and operating profitability remains the central issue for a company still spending aggressively to build its platform.
Balance sheet liquidity is strong but cash generation is not: the current ratio of 3.13 and $604.34 million of cash at the end of Q2 2026 provide ample runway, yet trailing free cash flow is -$272.97 million and Q2 operating cash flow was -$7.53 million after Q1's -$73.28 million outflow. Debt-to-equity of 2.70 and a debt ratio of 0.61 reflect the convertible-debt-heavy capital structure, and with ROE at -49.87% and ROA at -8.83%, the company is not yet earning its cost of capital. Stock-based compensation of $54.12 million in Q2 alone is a material non-cash drag that flatters cash flow relative to GAAP earnings, so investors should treat the improving net income line with skepticism until operating cash flow turns sustainably positive.
Quarterly Revenue
$382486000.0B
2026-06
Revenue YoY Growth
+21.6%
YoY Comparison
Gross Margin
64.5%
Latest Quarter
Free Cash Flow
$-272973000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
Open an Account, get $2 TSLA now!
Valuation Analysis: Is TEM Overvalued?
Because trailing net income is negative (EPS of -$0.024, trailing PE of -41.88), the PE ratio is not meaningful and I am leading with the price-to-sales ratio of 8.09x and EV/sales of 8.48x as the primary valuation anchors; the forward PE of -1,435.26 is also unusable given the near-zero forward earnings base. The 8.1x sales multiple is the key number — it prices in substantial growth but is far below the 27.2x PS the stock carried in Q2 2026 and the 42.2x seen in Q3 2025, reflecting both the revenue ramp and the share-price reset. The PEG ratio of 0.60 is the one metric that screens cheap, but it rests on aggressive forward EPS estimates and should be treated as indicative rather than decisive.
Against the healthcare information services peer group, TEM's 8.1x sales and 20.9x book value sit at a premium to mature health-IT names but at a discount to high-growth AI-healthcare comps; the negative EV/EBITDA of -92.93 and negative PCF of -47.18 confirm the company is being valued on revenue and strategic optionality rather than cash earnings. The premium is defensible only if the Personalis deal and data-licensing ramp deliver the consensus revenue of ~$3.25 billion and the estimated EPS of ~$2.88, which would imply a forward multiple far more reasonable than the trailing figures suggest. In short, the market is paying for growth and platform scarcity, not current profitability.
Historically, TEM's PS multiple has compressed dramatically — from 51.8x in Q3 2024 and 42.2x in Q3 2025 to 27.2x in Q2 2026 and 8.1x today — placing the stock near the bottom of its own valuation band even as the share price has recovered. That compression is partly mechanical (revenue growth) and partly a de-rating of speculative AI-healthcare multiples, which cuts both ways: it argues the stock is cheaper relative to its own history, but it also warns that the market is no longer willing to pay peak multiples for this business model. The PB ratio of 20.9x remains elevated versus the 19.4x-23.4x range of the past year, so book value offers little valuation support.
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: trailing free cash flow is -$273.0 million, and Q2 operating cash flow was -$7.5 million after Q1's -$73.3 million outflow, indicating the company is not yet self-funding. Operating income remains deeply negative at -$75.9 million (-19.9% margin) despite a 64.45% gross margin, as R&D ($96.6M) and SG&A ($225.8M) consume gross profit. The debt-to-equity ratio of 2.70 and debt ratio of 0.61 reflect a convertible-debt-heavy capital structure, and with ROE at -49.87% and ROA at -8.83%, the company is not earning its cost of capital. Stock-based compensation of $54.1 million in Q2 alone is a material non-cash drag that flatters cash flow relative to GAAP earnings.
Market and competitive risks are amplified by the stock's extreme volatility (beta 3.54) and premium valuation (8.1x PS, 20.9x PB). The PS multiple, while down from 51.8x in Q3 2024, still prices in significant growth and platform scarcity, leaving little room for disappointment. Competitive disruption in AI-driven diagnostics and data licensing is a constant threat, and the wide analyst target range ($35-$100) underscores disagreement about the durability of the business model. Recent news highlights a sharp rotation out of high-flying tech into defensive sectors, which could disproportionately impact high-beta names like TEM. Regulatory headwinds in healthcare data privacy and reimbursement could also pressure margins.
Worst-case scenario: a failure to integrate Personalis, combined with persistent cash burn and a market rotation away from speculative AI-healthcare names, could drive the stock toward its 52-week low of $40.77, representing a 39.7% decline from the current $67.615. The analyst low target of $35 implies a 48.2% downside. Given the max drawdown of -59.76%, a more severe scenario could see the stock fall below $30 if cash reserves dwindle and the company requires dilutive financing. Investors should be prepared for potential losses of 40-50% from current levels in an adverse scenario.
FAQ
The most severe risk is financial: trailing free cash flow is -$273 million, and operating cash flow remains negative, which could force dilutive financing. Second, competitive and execution risk: the Personalis acquisition may not deliver expected synergies, and revenue growth is already decelerating to 21.6% YoY from 37%. Third, market risk: the stock's beta of 3.54 means it is highly sensitive to market rotations, and a shift away from high-growth tech could compress multiples further. Fourth, company-specific risk: heavy stock-based compensation ($54.1 million in Q2) dilutes shareholders and flatters cash flow. Ranked by severity: cash burn, integration risk, valuation compression, and dilution.
Our 12-month forecast has three scenarios: Bull (25% probability) targeting $93-$100 on successful Personalis integration and revenue re-acceleration; Base (50% probability) targeting $70-$80 on steady growth and margin stability; Bear (25% probability) targeting $35-$45 on integration failure and persistent cash burn. The base case is most likely, assuming revenue growth remains in the low-to-mid 20% range and gross margins hold above 64%. The key assumption is that Tempus maintains adequate liquidity without dilutive financing and that the Personalis deal closes without major issues. The wide range reflects the high uncertainty inherent in this speculative growth story.
TEM's valuation is best assessed using its PS ratio of 8.1x, which is below its historical average of 27.2x in Q2 2026 and 51.8x in Q3 2024, but still at a premium to mature health-IT peers. The PEG ratio of 0.60 suggests the stock may be undervalued relative to expected growth if forward EPS estimates of $2.88 are met. However, the negative earnings and cash flow make traditional metrics less reliable. The market is pricing in significant growth and platform scarcity, implying that Tempus must successfully integrate Personalis and re-accelerate revenue to justify the multiple. Relative to its own history, the stock is cheaper, but relative to current fundamentals, it is fairly valued to slightly overvalued.
Whether TEM is a good buy depends on your risk tolerance and investment horizon. The stock offers 10.8% upside to the analyst average target of $74.94, but the wide target range of $35 to $100 reflects high uncertainty. The company is growing revenue at 21.6% YoY with expanding gross margins, but it remains unprofitable with -$273 million in trailing free cash flow. The biggest downside risk is a 40-48% decline to the 52-week low or analyst low target if growth decelerates or cash burn persists. For aggressive growth investors with a long-term view, TEM could be a speculative buy on dips, but conservative investors should wait for clearer signs of operating leverage.
TEM is more suitable for long-term investors who can tolerate extreme volatility (beta 3.54) and have a multi-year horizon. The company is in a high-growth phase with negative earnings and cash flow, and its success depends on the Personalis integration and the ramp of data licensing, which will take time to play out. Short-term trading is risky due to the stock's sharp swings (max drawdown -59.76%) and headline-driven nature. A minimum holding period of 2-3 years is recommended to allow the growth story to materialize. The lack of dividends and earnings visibility makes it unsuitable for income-focused investors.