Tempus AI
TEM
$67.99
-4.14%
Tempus AI, Inc. operates a technology platform that frees healthcare data from silos and applies artificial intelligence, including generative AI, to make laboratory tests more accurate, tailored, and personal, primarily serving the precision medicine and oncology diagnostics market. The company has positioned itself as a data-and-diagnostics platform rather than a traditional lab, monetizing both its Intelligent Diagnostics franchise and its sequencing and data-licensing businesses, which distinguishes it from conventional diagnostic peers. The current investor narrative is dominated by the pending Personalis acquisition, which bulls argue could materially expand Tempus's precision medicine footprint and data moat, and by the stock's dramatic re-rating since its mid-2024 IPO. At the same time, debate centers on whether the company's still-negative GAAP profitability, heavy stock-based compensation, and elevated leverage can be reconciled with a premium growth multiple, making execution on integration and margin progression the key swing factors for the shares.…
TEM
Tempus AI
$67.99
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Investment Opinion: Should I buy TEM Today?
The synthesized recommendation is a Hold. The core thesis is that Tempus AI is a high-growth, AI-driven diagnostics platform with a compelling long-term story, but the current valuation and near-term risks warrant caution. The analyst consensus rating is 'buy' with an average target price of $72.72, implying only 2.5% upside from the current price of $70.93, suggesting the stock is fairly valued after its sharp run. The wide target range from $35 to $100 reflects high uncertainty, and the risk/reward is balanced at current levels.
Supporting evidence includes a PS ratio of 8.09x, which is near the low end of the company's historical band (ranging from 93.27x in Q4 2021 to 27.25x in Q2 2026), and a PEG ratio of 0.60, which suggests the valuation is reasonable on a growth-adjusted basis. Revenue grew 21.56% YoY to $382.49 million in Q2 2026, and gross margin expanded to 64.45% from 61.99%. However, free cash flow remains negative at -$272.97 million, and the company carries a debt-to-equity of 2.70. The implied upside to the average analyst target is minimal, while the high target of $100 offers 41% upside if execution is flawless.
The biggest risks that could invalidate the thesis include a failure to achieve sustainable operating leverage, integration missteps with the Personalis acquisition, and a market rotation away from high-beta growth stocks. The Hold rating would upgrade to Buy if the stock pulls back to the $60 support level or if free cash flow turns positive, and it would downgrade to Sell if revenue growth decelerates below 15% or if operating margins fail to improve. Relative to its history and peers, the stock appears fairly valued, with the premium PS multiple justified only by continued execution.
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TEM 12-Month Price Forecast
Tempus AI presents a balanced risk/reward profile at current levels. The company is growing revenue at a healthy 21.56% YoY and expanding gross margins, but remains unprofitable on an operating basis and burns significant cash. The valuation has compressed to near historical lows on a PS basis, but the average analyst target offers minimal upside, suggesting the stock is fairly valued. The extreme beta of 3.54 and wide analyst target range ($35-$100) highlight high uncertainty. I would upgrade to bullish if free cash flow turns positive or if the stock pulls back to the $60 support level, and downgrade to bearish if revenue growth decelerates below 15% or if operating margins fail to improve.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Tempus AI's 12-month outlook, with a consensus price target around $72.72 and implied upside of +7.0% versus the current price.
Average Target
$72.72
0 analysts
Implied Upside
+7.0%
vs. current price
Analyst Count
—
covering this stock
Price Range
$35 - $100
Analyst target range
Tempus AI is covered by 18 analysts with a consensus recommendation of "buy" and a recommendation mean of 2.2, and the average target price of $72.72 implies roughly +2.5% upside from the current price of $70.93, a surprisingly modest gap given the bullish rating. The consensus leans constructive but not euphoric: the average target sits just above the market price, suggesting analysts see the stock as roughly fairly valued after its sharp run, with the buy rating reflecting confidence in the growth story rather than a large near-term re-rating opportunity. The estimated average EPS of $1.24 and estimated revenue of $3.25 billion for the forward period underpin the bullish case, and the fact that the stock has already rallied to within a few percent of the average target means much of the near-term optimism is priced in. The target range is extremely wide, from a low of $35.00 to a high of $100.00, a spread of roughly 186% of the current price, which signals very high uncertainty and low conviction about the company's earnings path. The high target of $100 assumes successful integration of the Personalis acquisition, accelerating Diagnostics growth, and a clear path to sustained profitability that justifies a premium multiple, while the low target of $35 prices in margin compression, integration missteps, or a return to cash-burn concerns that would compress the multiple back toward historical lows. Institutional ratings show a constructive drift: Piper Sandler upgraded to Overweight from Neutral on 2026-09-01, while HC Wainwright, BTIG, and Needham have maintained Buy ratings through mid-2026 and Stifel and Freedom Capital Markets remain Hold, indicating analysts are warming to the story but not uniformly. The wide dispersion and the fact that the average target barely exceeds the current price argue for caution on chasing the stock at these levels, and with a beta of 3.54, the risk of a sharp drawdown if execution disappoints is substantial.
Bulls vs Bears: TEM Investment Factors
The bull case currently has stronger evidence, driven by accelerating revenue growth, margin expansion, and a valuation that has compressed to historical lows. However, the bear case is not without merit: the company remains unprofitable on an operating basis, burns cash, and carries significant leverage, while the average analyst target implies minimal upside. The single most important tension is whether Tempus can convert its gross margin into sustainable operating leverage and positive free cash flow, which would justify the premium multiple and potentially drive the stock toward the high target of $100. If execution falters, the downside could be severe given the beta of 3.54 and the wide analyst target range.
Bullish
- Revenue scaling with 21.6% YoY growth: Q2 2026 revenue reached $382.49 million, up 21.56% from $314.64 million in Q2 2025, and has grown roughly 50% over the past five quarters from $255.74 million in Q1 2025. This consistent sequential expansion demonstrates a durable platform rather than a one-off diagnostic product.
- Gross margin expansion and first positive net income: Gross margin expanded to 64.45% in Q2 2026 from 61.99% a year earlier, while net income turned positive at $5.64 million, a dramatic swing from the -$125.92 million loss in Q1 2026. Although aided by $81.86 million in other income, the improvement signals progress toward profitability.
- Valuation near historical low on PS basis: The current PS ratio of 8.09x is near the low end of the company's historical band, which ranged from 93.27x in Q4 2021 to 27.25x in Q2 2026. This compression reflects the revenue base growing into the multiple and the prior stock decline, making the valuation far less stretched than a year ago.
- Strong relative strength and momentum: The stock has gained 65.18% over six months and 21.81% over three months, with relative strength versus SPY of +50.59% and +18.68% over those periods. This divergence from the 1-year relative strength of -44.56% signals a trend reversal driven by stock-specific catalysts.
Bearish
- Negative operating margin and cash burn: Despite positive net income, the core business remains unprofitable with an operating margin of -19.88% and trailing free cash flow of -$272.97 million. Q2 2026 free cash flow was -$18.62 million, and the company depends on its $604.34 million cash pile to fund operations.
- Extreme leverage and negative ROE: Debt-to-equity stands at 2.70 with a debt ratio of 0.61, and ROE is -49.87% and ROA is -8.55%, confirming that capital is not yet being deployed profitably. The $228.98 million debt repayment in Q2 consumed liquidity, highlighting balance sheet risk.
- Average analyst target implies minimal upside: The average target price of $72.72 offers only 2.5% upside from the current price of $70.93, suggesting the stock is fairly valued after its sharp run. The wide target range from $35 to $100 signals very high uncertainty and low conviction about the earnings path.
- Extreme volatility with beta of 3.54: The stock is roughly 3.5 times as volatile as the market, with a max drawdown of -59.76% and a 1-year price decline of -28.56%. This amplifies downside risk, especially if execution disappoints or market sentiment shifts against high-growth names.
TEM Technical Analysis
Tempus AI is in a powerful recovery uptrend that has more than reversed its prior downtrend, with the stock at $70.93 versus a 52-week low of $40.77 and a 52-week high of $101.56, placing it roughly 50% above its low but still about 30% below its high, or approximately 49% of the way up its 52-week range. The 1-year price change of -28.56% masks a violent regime shift: the stock fell hard into mid-2026 before bottoming, and the current price sits well above the 40.77 low, signaling that buyers have seized control rather than the stock being a falling knife. The -59.76% max drawdown underscores how severe the prior decline was, and the fact that price has recovered roughly half of that range suggests the market is repricing the equity on improving fundamentals rather than pure momentum. Recent momentum is decisively positive and accelerating: the 1-month change of +15.75% and 3-month change of +21.81% both dwarf the 1-year decline, while the 6-month change of +65.18% confirms a sustained, multi-month advance. Relative strength versus SPY is strongly positive over 1-month (+13.63%), 3-month (+18.68%), and 6-month (+50.59%) windows, even though the 1-year relative strength is -44.56%, a classic divergence that signals trend reversal rather than mean reversion. The 1-month gain of 15.75% versus SPY's 2.12% shows the stock is being driven by stock-specific catalysts, and the 3.48 short ratio implies bears have been squeezed, adding fuel to upside moves. Key levels are well defined: support sits near the 52-week low of $40.77, with intermediate support around the $60 area that has repeatedly been defended, while resistance is the 52-week high of $101.56, with the recent $85.08 high-water mark acting as the nearer ceiling. A breakout above $85 would open a path toward the $101.56 high, whereas a breakdown below $60 would threaten a retest of the $40.77 low and invalidate the recovery thesis. With a beta of 3.54, the stock is roughly 3.5 times as volatile as the market, meaning position sizing must be dramatically smaller than a typical equity and stop-losses should be wider to avoid noise-driven exits.
Beta
3.54
3.54x market volatility
Max Drawdown
-59.8%
Largest decline past year
52-Week Range
$41-$97
Price range past year
Annual Return
-29.5%
Cumulative gain past year
| Period | TEM Return | S&P 500 |
|---|---|---|
| 1m | +15.2% | +1.8% |
| 3m | +15.9% | +3.5% |
| 6m | +20.5% | +11.2% |
| 1y | -29.5% | +19.1% |
| ytd | +9.0% | +14.1% |
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TEM Fundamental Analysis
Tempus AI's revenue trajectory is one of strong, consistent growth: Q2 2026 revenue reached $382.49 million, up 21.56% year-over-year from $314.64 million in Q2 2025, and the multi-quarter trend shows sequential expansion from $348.12 million in Q1 2026 and $367.21 million in Q4 2025. The Diagnostics segment generated $289.33 million of that total, confirming it is the dominant growth engine, while the remaining revenue comes from data and applications offerings. Growth has been remarkably steady across the last several quarters, with revenue rising from $255.74 million in Q1 2025 to the current $382.49 million, a roughly 50% increase in five quarters, which supports the bull case that Tempus is scaling a durable platform rather than a one-off diagnostic product. Profitability is improving but still fragile: Q2 2026 net income turned positive at $5.64 million, a dramatic swing from the -$125.92 million loss in Q1 2026 and -$42.84 million in Q2 2025, while gross margin expanded to 64.45% from 61.99% a year earlier. The company remains unprofitable on a trailing basis, with a net margin of -19.27% and operating margin of -19.88%, and R&D spending of $96.57 million plus stock-based compensation of $54.12 million continue to weigh on GAAP results. The positive Q2 net income was helped by $81.86 million in other income, so the underlying operating loss of -$75.91 million shows the core business is not yet self-funding, and the 62.74% gross margin is solid for diagnostics but must be paired with operating discipline to reach sustainable profitability. The balance sheet is liquid but leveraged: the current ratio of 3.13 and cash of $604.34 million provide a comfortable near-term cushion, but debt-to-equity of 2.70 and a debt ratio of 0.61 signal meaningful leverage, and free cash flow remains negative at -$272.97 million on a trailing basis. Q2 2026 free cash flow was -$18.62 million with operating cash flow of -$7.53 million, an improvement from Q1's -$83.34 million FCF, but the company still depends on its cash pile and capital markets access to fund operations. ROE of -49.87% and ROA of -8.55% confirm that capital is not yet being deployed profitably, and the -$228.98 million debt repayment in Q2 shows management is actively managing maturities, which is prudent but consumes liquidity.
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
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Valuation Analysis: Is TEM Overvalued?
Because Tempus AI's trailing net income is negative (EPS of -$0.024 and trailing PE of -41.88), the PE ratio is not meaningful, so the PS ratio is the appropriate primary metric; the stock trades at a PS of 8.09x and an EV/Sales of 9.17x. The forward PE of -8,767.61 is distorted by near-zero estimated earnings, but the forward EPS estimate of $1.24 implies the market expects a sharp profitability inflection, and the PEG ratio of 0.60 suggests that on a growth-adjusted basis the valuation is not stretched if that earnings trajectory materializes. The gap between the negative trailing PE and the positive forward EPS estimate captures the central debate: investors are paying today for earnings that do not yet exist, so execution risk is embedded in the multiple. Relative to the healthcare information services sector, a PS of 8.09x is a clear premium, though the company's 21.56% revenue growth and 62.74% gross margin justify a growth premium versus slower-growing lab and health-IT peers; the EV/Sales of 9.17x versus a PS of 8.09x reflects the net debt load from the 2.70 debt-to-equity ratio. The premium is defensible only if Tempus sustains 20%+ growth and converts gross margin into operating leverage, and the 0.60 PEG ratio implies the market is pricing roughly 13-14x earnings growth, which is aggressive but not irrational for a scaling AI-healthcare platform. Historically, Tempus's PS ratio has compressed dramatically: it was 27.25x in Q2 2026, 23.24x in Q1 2026, 28.02x in Q4 2025, and 42.25x in Q3 2025, and it traded as high as 51.81x in Q3 2024 and 93.27x in Q4 2021. The current 8.09x PS is near the low end of the company's own historical band, a function of both the revenue base growing into the multiple and the stock's prior decline, which suggests the valuation is far less stretched than it was a year ago. That said, the PB ratio of 20.94x remains elevated and the negative FCF yield (price-to-free-cash-flow of -559.84x) shows the market is still paying for future cash generation rather than current cash returns.
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
Tempus AI faces significant financial and operational risks. The company remains unprofitable on a trailing basis, with a net margin of -19.27% and operating margin of -19.88%, despite a positive Q2 2026 net income of $5.64 million that was largely aided by $81.86 million in other income. Free cash flow is deeply negative at -$272.97 million on a trailing basis, and the company relies on its $604.34 million cash pile to fund operations. Debt-to-equity of 2.70 and a debt ratio of 0.61 indicate meaningful leverage, and the $228.98 million debt repayment in Q2 consumed liquidity. Additionally, heavy stock-based compensation of $54.12 million and R&D spending of $96.57 million continue to pressure GAAP results, and revenue concentration in the Diagnostics segment ($289.33 million of Q2 revenue) exposes the company to segment-specific risks.
Market and competitive risks are elevated. The stock trades at a premium PS of 8.09x and EV/Sales of 9.17x relative to the healthcare information services sector, which could compress if growth decelerates or if the company fails to achieve profitability. With a beta of 3.54, the stock is highly sensitive to market rotations, as evidenced by the -59.76% max drawdown and the 1-year decline of -28.56%. Competitive threats from other AI-driven diagnostics platforms and traditional lab companies could erode Tempus's market position. Recent news highlights the pending Personalis acquisition as a key catalyst, but integration missteps could damage the bull case. Regulatory headwinds in healthcare data privacy and reimbursement also pose risks.
In a worst-case scenario, a failure to integrate the Personalis acquisition, coupled with continued cash burn and margin compression, could trigger a sharp sell-off. The stock could retest its 52-week low of $40.77, representing a decline of approximately 42.5% from the current price of $70.93. The analyst low target of $35 implies a 50.7% downside. Given the beta of 3.54 and the historical max drawdown of -59.76%, a drop to the low $40s or even $35 is plausible if execution disappoints or if the market rotates out of high-growth healthcare names. Investors could lose 40-50% of their capital in this adverse scenario.
FAQ
The key risks include financial, competitive, macro, and company-specific factors. Financially, the company has a debt-to-equity of 2.70 and negative free cash flow of -$272.97 million, which could force dilutive financing. Competitively, the AI-driven diagnostics space is crowded, and Tempus faces threats from both traditional labs and new AI entrants. Macro risks include a beta of 3.54, making the stock highly sensitive to market rotations, as shown by the -59.76% max drawdown. Company-specific risks center on the Personalis acquisition integration, which could fail to deliver synergies. The most severe risk is a cash crunch leading to a retest of the 52-week low of $40.77, a 42.5% decline.
The 12-month forecast includes three scenarios: a bull case with 25% probability targeting $100-$110, a base case with 55% probability targeting $70-$80, and a bear case with 20% probability targeting $35-$45. The base case is most likely, assuming revenue growth of 20-22% YoY and stable gross margins around 64%, with the stock trading near the analyst average target of $72.72. The bull case requires successful Personalis integration and positive free cash flow, while the bear case assumes integration missteps and continued cash burn. The key assumption behind the base case is that Tempus maintains its growth trajectory without major operational setbacks.
Tempus AI appears fairly valued relative to its history and peers. The PS ratio of 8.09x is near the low end of its historical band, which ranged from 93.27x in Q4 2021 to 27.25x in Q2 2026, suggesting significant compression. However, the EV/Sales of 9.17x and PB of 20.94x indicate a premium to the broader healthcare information services sector. The PEG ratio of 0.60 suggests the valuation is reasonable on a growth-adjusted basis, assuming the forward EPS of $1.24 materializes. The market is pricing in a sharp profitability inflection, and if that fails to occur, the stock could be overvalued. Conversely, if Tempus sustains 20%+ growth and improves margins, the current multiple could prove undervalued.
Tempus AI is a high-risk, high-reward stock that may be a good buy for aggressive investors, but it is not suitable for conservative portfolios. The analyst consensus is 'buy' with an average target of $72.72, implying only 2.5% upside, while the high target of $100 offers 41% upside if execution is flawless. The stock trades at a PS of 8.09x, which is near its historical low, but the company remains unprofitable with negative free cash flow of -$272.97 million. The biggest downside risk is a retest of the 52-week low of $40.77, representing a 42.5% decline. For those with a long-term horizon and tolerance for volatility, a small position could be justified, but waiting for a pullback to the $60 support level would improve the risk/reward.
Tempus AI is more suitable for long-term investment, given its early growth stage, negative free cash flow, and lack of dividend. The stock's beta of 3.54 and max drawdown of -59.76% make it highly volatile, unsuitable for short-term trading unless one has a high risk tolerance and active management. The company's earnings visibility is low, with a wide analyst target range of $35 to $100, suggesting that the investment thesis will take time to play out. A minimum holding period of 2-3 years is recommended to allow for the Personalis integration and potential profitability inflection. Short-term traders could exploit momentum, but the risk of sharp reversals is significant.