Tempus AI, Inc.

Based on a comprehensive review of TEM's technical, fundamental, valuation, and risk profile, the recommendation is Not to Buy.

The stock exhibits extreme volatility and severe underperformance, driven by a fundamentally unsound business. Despite a strong liquidity position, the company is unprofitable, highly leveraged, and appears significantly overvalued given its negative earnings and poor operational efficiency.

These factors, combined with a risk profile featuring a beta of over 5 and a recent drawdown exceeding -51%, indicate substantial downside risk with no clear catalyst for a sustainable turnaround. For most investors, the pronounced weaknesses and high risk of capital erosion outweigh any potential for a short-term bounce from oversold conditions.

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Based on the comprehensive analysis, the 12-month outlook for TEM is highly unfavorable. The primary catalysts are scarce, with any potential price movement likely stemming from short-term, speculative bounces from deeply oversold levels rather than a fundamental business turnaround. The significant risks are the dominant feature, including extreme volatility (beta >5), high leverage, ongoing operational losses, and the substantial risk of further capital erosion.

Given the absence of profitable operations, unsustainable financial structure, and severe underperformance, the stock is expected to remain under significant pressure. In the absence of a credible turnaround plan, the risk/reward profile is skewed heavily to the downside, suggesting the current price could deteriorate further over the next year.

Wall Street Consensus

Most Wall Street analysts are optimistic about Tempus AI, Inc.'s 12-month outlook, with consensus target around $59.96, indicating expected upside potential.

Overall, TEM has investment potential but also faces challenges. Here are key factors to weigh before investing.

TEM has demonstrated extremely volatile and substantially negative performance over the past year.

The stock has declined sharply in both the short term, with significant 1-month and 3-month drops of over 10%. Its performance has severely underperformed the broader market by 13.6% over the last three months, indicating pronounced weakness. The exceptionally high beta of 5.2 confirms this extreme volatility and outsized moves relative to the market.

While the current price is near the midpoint of its 52-week range, its proximity to a recent 1-year max drawdown exceeding -51% suggests continued vulnerability rather than a stable position. The stock's extreme volatility makes traditional overbought/oversold assessments less reliable, but the steep recent declines point toward an oversold condition, albeit within a highly unstable trend.

Revenue & Profitability TEM showed modest revenue growth from Q2 to Q3 2025, increasing from $314.6 million to $334.2 million. However, the company reported significant operating and net losses in both quarters, with the net profit margin deteriorating further to -23.9% in Q3. Despite a healthy gross margin above 61%, high operating expenses continue to erode profitability.

Financial Health TEM maintains a strong liquidity position with current and quick ratios above 3.0, supported by substantial cash reserves. However, the debt-to-equity ratio of 2.63 indicates high leverage, while negative operating cash flow and cash flow to debt ratio signal challenges in servicing obligations from operations.

Operational Efficiency The company demonstrates poor operational efficiency with negative returns on assets (-3.5%) and equity (-15.7%) in Q3 2025. Asset turnover remains low at 0.15, indicating inefficient utilization of assets to generate revenue, while the extended cash conversion cycle of 74.5 days reflects working capital management challenges.

Based on the provided metrics, TEM appears significantly overvalued on a fundamental basis. The company is unprofitable, as evidenced by its negative trailing and forward PE ratios, meaning the market is assigning a positive price to a business generating net losses. This negative earnings picture is further confirmed by the negative EV/EBITDA, indicating poor operational cash flow generation relative to its enterprise value. The high price-to-book ratio of 19.67 suggests the market is valuing its equity at a substantial premium to its accounting net asset value.

A peer comparison using industry averages is not possible, which limits the context for this analysis. Without industry benchmarks for these valuation metrics, it is impossible to determine if TEM's negative earnings multiples and high price-to-book ratio are typical for its sector or outliers. Therefore, the assessment of overvaluation is based solely on the absolute values of the metrics, which uniformly point to a premium valuation for a company that is not currently profitable.

The stock exhibits extremely high volatility risk, with a beta of 5.23 indicating it is approximately five times more volatile than the broader market. This is corroborated by a severe maximum one-year drawdown of -51.47%, highlighting significant potential for substantial capital erosion during market downturns. Such extreme price swings present a considerable challenge for risk management and capital preservation.

Regarding other risks, the notable absence of reported short interest could suggest either limited bearish sentiment or a lack of available shares to borrow, which may impact price discovery during a sell-off. Furthermore, the lack of short interest data might also hint at potential liquidity constraints, as such information is typically available for more actively traded securities. These factors could contribute to distorted price movements under stressed market conditions.