Tempus AI, Inc.

Based on the provided data, TEM presents a highly speculative and high-risk profile that makes it difficult to recommend for most investors.

Analysis Summary:

From a technical standpoint, TEM is in a sharp downtrend with extreme volatility, signaling high risk. Fundamentally, the company is deeply unprofitable with negative cash flow and concerning leverage, despite decent revenue growth and a strong liquidity cushion. Its valuation appears stretched, with negative earnings rendering traditional metrics meaningless and elevated price-to-sales suggesting the market is pricing in significant future success that has yet to materialize. The absence of peer data makes benchmarking difficult, but its lack of profitability would likely place it at a severe disadvantage.

Recommendation:

A buy recommendation is not warranted at this time. The combination of severe operational losses, negative cash flow, and extreme stock price volatility presents an unacceptable level of risk for the average investor. While the company has a solid gross margin and cash balance, investors should wait for clear signs of a sustainable path to profitability and a stabilization in the stock's price trend before considering a position. The current setup is better suited for highly risk-tolerant speculators rather than long-term investors.

RockFlow Model Forecast: Three Scenarios for 2026

Based on the comprehensive analysis provided, here is a 12-month outlook for TEM stock:

The primary catalysts for any potential recovery would be a demonstrable turnaround towards profitability and positive cash flow generation; without these fundamental improvements, the stock is unlikely to sustain significant gains. Key risks remain acute, including its persistent operational losses, negative cash flow, extreme price volatility, and the high valuation that appears disconnected from its current financial performance. Given the absence of an analyst target price and the company's deeply speculative profile, establishing a clear target price range is not prudent; investors should instead watch for a confirmed break in the downtrend coupled with improving fundamentals before considering a position.

Wall Street Consensus

Most Wall Street analysts are optimistic about Tempus AI, Inc.'s 12-month outlook, with consensus target around $70.33, indicating expected upside potential.

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

Overall Assessment: TEM has experienced substantial weakness, with shares declining approximately 35% over the past three months, significantly underperforming the broader market during this period.

Short-term Performance: The stock's downturn has accelerated recently, posting a 9% loss over the last month. Notably, while it continues to underperform the market on a trailing three-month basis, its recent one-month relative strength shows some signs of stabilization, though it remains in a pronounced downtrend.

Current Position: Trading at $67.15, TEM sits near the midpoint of its 52-week range ($31.66-$104.32), suggesting it is neither technically overbought nor oversold. However, the extreme beta of 5.23 indicates exceptionally high volatility and a severe maximum drawdown of -58% confirms the stock has been subject to dramatic price swings, warranting caution regarding its risk profile.

Revenue & Profitability TEM's Q3 2025 revenue grew 6.2% quarter-over-quarter to $334 million, with a stable gross profit ratio of approximately 62%. However, the company reported a significant operating loss of nearly $60 million, resulting in a negative operating margin of -17.9%, which indicates substantial unprofitability despite reasonable gross margins.

Financial Health The company maintains a strong liquidity position with a current ratio of 3.3 and cash ratio of 1.9, but carries significant leverage with a debt-to-equity ratio of 2.6. Cash flow metrics are concerning with negative operating cash flow and a cash flow to debt ratio of -0.09, suggesting challenges in servicing debt obligations from operations.

Operational Efficiency TEM demonstrates weak operational performance with a return on equity of -15.7% and return on assets of -3.5%, reflecting inefficient use of capital. The asset turnover ratio of 0.15 indicates poor utilization of assets to generate revenue, while an operating cycle of 116 days suggests room for improvement in working capital management.

Valuation Level: TEM's ratios indicate severe overvaluation across multiple metrics. The negative PE and EV/EBITDA ratios reflect that the company is currently unprofitable, while the elevated PB ratio of 24.26 and PS ratio of 11.15 suggest the market is pricing the stock at substantial premiums to its tangible assets and revenue base. The negative PEG ratio further confirms the lack of meaningful earnings growth to justify current valuation levels.

Peer Comparison: Without industry average data available, a direct comparative analysis cannot be conducted. However, the extreme negative profitability metrics and elevated multiples would likely place TEM at a significant disadvantage relative to profitable industry peers. The absence of positive earnings and cash flow metrics suggests the company is substantially misaligned with typical valuation benchmarks in its sector.

The stock exhibits exceptionally high volatility risk, as evidenced by its extreme beta of 5.23 indicating it is roughly five times more volatile than the broader market. This elevated risk profile is further confirmed by the substantial one-year maximum drawdown of -58.37%, highlighting significant potential for capital depreciation during market downturns.

Regarding other risks, the reported absence of short interest removes one potential source of downward pressure but does not inherently mitigate other factors. While this suggests current market sentiment may not be overtly bearish, the extreme volatility and illiquidity often characteristic of such highly speculative stocks remain the primary non-systematic risks for investors.