Tempus AI
TEM
$72.69
+9.06%
Tempus AI, Inc. is a healthcare technology company that leverages artificial intelligence to unlock and analyze clinical and molecular data, offering intelligent diagnostics and data-driven insights to improve patient care. As a pioneer in applying generative AI to precision medicine, Tempus has established a leading platform that integrates laboratory testing with an operating system designed to make healthcare data actionable, positioning itself as a key player in the emerging AI-driven healthcare information services sector. The current investor narrative centers on the company's rapid revenue growth and expanding adoption of its diagnostics, while also grappling with persistent profitability challenges, a high valuation, and the broader market's shifting sentiment toward AI and growth stocks, as evidenced by recent volatility and analyst optimism about its long-term potential.…
TEM
Tempus AI
$72.69
Investment Opinion: Should I buy TEM Today?
Rating: Hold. The thesis is that Tempus AI has strong growth potential but is currently unprofitable and trading at a premium valuation. The analyst consensus is Buy with an average target of $62.64, implying 20.2% upside, but the high risk and volatility warrant caution. The stock is suitable for investors with a high risk tolerance and a long-term horizon.
Sign up to view all
TEM 12-Month Price Forecast
The AI assessment is bullish with medium confidence. The company's strong revenue growth and margin expansion indicate a solid business model, but the persistent losses and high valuation create uncertainty. The stock is trading near its 52-week low, offering a potential entry point for long-term investors. However, the high beta and negative free cash flow warrant caution. I would upgrade to high confidence if the company achieves positive operating income or if the PS ratio drops below 7x. Conversely, I would downgrade to neutral if revenue growth falls below 25% or if the company announces a dilutive capital raise.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Tempus AI's 12-month outlook, with a consensus price target around $62.64 and implied upside of -13.8% versus the current price.
Average Target
$62.64
0 analysts
Implied Upside
-13.8%
vs. current price
Analyst Count
—
covering this stock
Price Range
$35 - $100
Analyst target range
Tempus AI is covered by 14 analysts, with a consensus recommendation of 'Buy' and a mean recommendation score of 2.19 (where 1 is Strong Buy and 5 is Sell), indicating a bullish outlook. The average target price is $62.64, implying an upside of 20.2% from the current price of $52.10, and the distribution shows 10 Buy ratings, 3 Hold, and 1 Sell, reflecting strong conviction. The target price range spans from a low of $35.00 to a high of $100.00, with the high target assuming successful execution of AI-driven growth and margin expansion, while the low target prices in continued losses and competitive pressures. Recent institutional ratings have been consistently positive, with firms like Needham, BTIG, and Morgan Stanley maintaining Buy or Overweight ratings, and no downgrades in the past six months, indicating a stable bullish sentiment. The wide spread between the low and high targets (65.7% difference) suggests high uncertainty about the company's future, but the consensus leans bullish, supported by the recent analyst actions.
Bulls vs Bears: TEM Investment Factors
Tempus AI presents a classic high-growth, high-risk investment. The bull case is anchored on accelerating revenue growth (36.1% YoY), expanding gross margins (62.7%), and a bullish analyst consensus with 20.2% upside. However, the bear case highlights persistent losses, high debt, extreme volatility (beta 3.578), and a valuation premium to the industry. Currently, the bull case has slightly stronger evidence given the growth trajectory and improving margins, but the key tension is whether the company can achieve profitability before investor patience runs out. The most critical factor is the path to positive operating income; if margins continue to improve and losses narrow, the stock could re-rate higher, but any stumble in growth or margin expansion could trigger a sharp sell-off given the high expectations.
Bullish
- Revenue growth accelerating: Q1 2026 revenue grew 36.1% YoY to $348.1M, up from 25.5% growth in Q1 2025, and sequentially from $314.6M in Q2 2025. This acceleration indicates strong market adoption of its diagnostics and data services.
- Gross margin expansion: Gross margin improved to 62.7% in Q1 2026 from 58.5% in Q3 2024, reflecting better operational leverage and cost management. This trend suggests the company is scaling efficiently.
- Analyst consensus bullish: With 14 analysts, the consensus is Buy (mean score 2.19) and the average target price is $62.64, implying 20.2% upside. No downgrades in the past six months, and firms like Needham and Morgan Stanley maintain positive ratings.
- Valuation below historical levels: Current PS ratio of 8.09x is near the bottom of its historical range (21.25x to 93.27x), suggesting the market has de-rated the stock significantly. This could offer a value entry if growth sustains.
Bearish
- Persistent unprofitability: Net loss of $125.9M in Q1 2026, with net margin of -36.2%, though improved from -41.9% in Q3 2024. The company has not demonstrated a clear path to profitability, and operating margin remains deeply negative at -22.2%.
- High debt-to-equity ratio: Debt-to-equity stands at 2.70, indicating significant reliance on debt financing. This increases financial risk, especially if interest rates remain elevated or revenue growth slows.
- Extreme volatility and underperformance: Beta of 3.578 and a 1-year price decline of -27.22% versus S&P 500 +20.37%. The stock has a max drawdown of -59.76%, and relative strength is -47.59% over the past year, indicating high risk.
- Valuation premium to industry: PS ratio of 8.09x is 79.8% above the industry average of 4.5x, even though the company is unprofitable. This premium may not be justified if growth decelerates or margins fail to improve.
TEM Technical Analysis
Tempus AI's stock has been in a pronounced downtrend over the past year, with a 1-year price change of -27.22%, significantly underperforming the S&P 500's +20.37% gain. The current price of $52.10 sits at 20.4% of its 52-week range (low of $40.77, high of $104.32), indicating the stock is trading near its lows, which could suggest either a value opportunity or a falling knife, depending on fundamental catalysts. The stock's beta of 3.578 implies it is 257.8% more volatile than the market, amplifying both downside and upside moves, and its relative strength versus the S&P 500 over the past year is -47.59%, highlighting severe underperformance.
Beta
3.58
3.58x market volatility
Max Drawdown
-59.8%
Largest decline past year
52-Week Range
$41-$104
Price range past year
Annual Return
-5.2%
Cumulative gain past year
| Period | TEM Return | S&P 500 |
|---|---|---|
| 1m | +54.8% | +2.5% |
| 3m | +57.4% | +2.7% |
| 6m | +24.5% | +11.1% |
| 1y | -5.2% | +20.5% |
| ytd | +16.6% | +12.3% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
TEM Fundamental Analysis
Tempus AI's revenue trajectory is robustly growing, with Q1 2026 revenue of $348.1 million, up 36.1% year-over-year, and a sequential increase from $314.6 million in Q2 2025, indicating accelerating growth. The company's diagnostics segment generated $261.1 million in revenue, representing 75% of total revenue, and is the primary growth driver, while the data and services segment contributes the remainder. Despite the strong top-line growth, the company remains unprofitable, with a net loss of $125.9 million in Q1 2026, though the net loss margin improved to -36.2% from -41.9% in Q3 2024, showing a narrowing loss trajectory. Gross margin has expanded to 62.7% in Q1 2026 from 58.5% in Q3 2024, reflecting improving operational efficiency, but operating margin remains deeply negative at -22.2%, indicating significant investment in R&D and sales. The balance sheet shows a current ratio of 3.13, indicating strong short-term liquidity, but a high debt-to-equity ratio of 2.70, suggesting reliance on debt financing, and free cash flow was -$81.5 million in Q1 2026, though the company has $521.2 million in cash, providing a runway for continued investment.
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
Open an Account, get $2 TSLA now!
Valuation Analysis: Is TEM Overvalued?
Given that Tempus AI has negative net income, the price-to-sales (PS) ratio is the most appropriate valuation metric, and it currently stands at 8.09x trailing, which is elevated for a company with a -19.3% net margin. The forward PE ratio is -3427.63, which is not meaningful due to expected near-term losses, but the PEG ratio of 0.60 suggests that growth is priced in, though this is based on analyst estimates that may be optimistic. Compared to the industry average PS ratio of 4.5x (from valuation data), Tempus trades at a 79.8% premium, reflecting the market's high expectations for its AI-driven growth, but this premium is justified by its superior revenue growth of 36.1% versus the industry average of 15%, and its gross margin of 62.7% is above the industry norm of 55%. Historically, Tempus's PS ratio has ranged from 21.25x in 2020 to 93.27x in 2021, and the current 8.09x is near the bottom of its historical band, suggesting that the stock is trading at a significant discount to its own historical valuation, which could indicate either a value opportunity or a de-rating due to persistent losses and market sentiment.
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 risks are substantial. The company's net loss of $125.9M in Q1 2026, though narrowing, indicates a heavy cash burn. With a debt-to-equity ratio of 2.70, the company relies on debt financing, and interest expenses of $14.3M in Q1 2026 add to the burden. Free cash flow is negative at -$81.5M, and the company has $521.2M in cash, providing a runway of about 6 quarters at the current burn rate. If revenue growth slows or margins fail to improve, the company may need to raise capital, potentially diluting shareholders. The operating margin of -22.2% shows that the company is still investing heavily in R&D and sales, which is typical for a growth company but increases financial risk.
FAQ
The key risks are: 1) Financial risk: persistent losses and negative free cash flow (-$81.5M in Q1 2026) could lead to dilution or debt issues. 2) Market risk: high beta (3.578) and underperformance relative to the S&P 500 (-47.59% over 1 year) indicate high volatility. 3) Competitive risk: the AI healthcare space is crowded, and new entrants could erode market share. 4) Valuation risk: the PS ratio of 8.09x is a premium to the industry, and any growth slowdown could cause multiple compression. The most severe risk is a prolonged downturn in growth stocks, which could push the stock to its 52-week low of $40.77 or lower.
The 12-month forecast is based on three scenarios: Bull case (30% probability) targets $65-$80, driven by accelerating growth and margin expansion. Base case (50% probability) targets $55-$65, in line with the analyst average of $62.64. Bear case (20% probability) targets $40-$45, if growth slows or losses persist. The most likely scenario is the base case, assuming the company maintains its current growth trajectory and gradually improves margins. The stock is expected to trade in a range of $50-$65 over the next year.
TEM trades at a PS ratio of 8.09x, which is 79.8% above the industry average of 4.5x, suggesting it is overvalued relative to peers. However, its revenue growth of 36.1% is well above the industry average of 15%, and its gross margin of 62.7% is higher than the industry norm of 55%. The PEG ratio of 0.60 indicates that growth is priced in, but this is based on optimistic estimates. Historically, the stock has traded at much higher PS ratios (21-93x), so the current level is near the bottom of its range, which could indicate undervaluation if growth persists.
TEM is a high-risk, high-reward stock. With a consensus Buy rating and an average target price of $62.64, analysts see 20.2% upside. However, the company is unprofitable, with a net loss of $125.9M in Q1 2026, and the stock is highly volatile (beta 3.578). It could be a good buy for investors with a long-term horizon who believe in the AI healthcare story and can tolerate significant drawdowns. For risk-averse investors, it may be better to wait for signs of profitability or a lower valuation.
TEM is more suitable for long-term investment, given its high growth potential and the transformative nature of its AI platform. The company is still in its early stages, and it may take several years to achieve profitability. Short-term trading is risky due to the stock's extreme volatility (beta 3.578) and sensitivity to market sentiment. A minimum holding period of 3-5 years is recommended to allow the company to execute on its growth strategy and for the market to recognize its value. Investors should be prepared for significant price swings and have a high risk tolerance.