Tempus AI
TEM
$70.35
-2.26%
Tempus AI, Inc. operates at the intersection of healthcare and artificial intelligence, providing a technology platform that liberates and organizes clinical and molecular data to make laboratory diagnostics more precise, personalized, and actionable. The company's core offerings span AI-enabled Intelligent Diagnostics — including genomic sequencing and molecular testing — alongside a data and analytics platform that monetizes de-identified clinical data for life sciences partners, positioning it as a hybrid diagnostics-plus-data platform rather than a traditional lab operator. Tempus is a first-mover in precision medicine infrastructure, competing with entrenched diagnostic incumbents while trying to establish itself as the operating system for data-driven oncology and beyond. 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, a thesis that helped drive a sharp August 2026 rally. At the same time, debate remains intense around the company's persistent GAAP losses, heavy stock-based compensation, and whether its premium valuation can be justified by a credible path to durable profitability.…
TEM
Tempus AI
$70.35
Related headlines
Investment Opinion: Should I buy TEM Today?
Rating: Hold. Tempus AI presents a high-risk, high-reward proposition with a consensus analyst rating of 'buy' (mean 2.2) and an average target price of $70.06, which implies 8.6% downside from the current $76.63. The core thesis is that Tempus is a first-mover in precision medicine infrastructure with a unique data moat, but its persistent losses and premium valuation warrant caution. The pending Personalis acquisition could be transformative, but integration risks and dilution are significant.\n\nSupporting evidence includes: 1) Revenue growth of 21.6% YoY in Q2 2026, with gross margin expanding to 64.45%; 2) A strong current ratio of 3.13, providing liquidity; 3) Analyst high target of $100, suggesting 30.5% upside if execution is flawless; and 4) The stock's relative strength of 23.1% over the past month, indicating positive momentum. However, these positives are offset by negative free cash flow of -$273M, a net margin of -19.3%, and a price-to-book ratio of 20.94, which is exceptionally high for a company with no consistent profitability.\n\nThe biggest risks that could invalidate the thesis are: 1) A failure to achieve profitability, leading to dilutive capital raises; 2) Integration issues with Personalis that disrupt operations; and 3) A market rotation away from high-beta growth stocks, given the beta of 3.72. The rating would upgrade to Buy if the company demonstrates a clear path to positive free cash flow and sustainable net income, or if the stock price corrects to a more reasonable valuation (e.g., P/B below 15). It would downgrade to Sell if revenue growth decelerates below 15% or if cash burn accelerates. Relative to its history and peers, the stock appears overvalued, trading at a significant premium to the healthcare sector average. The current price already reflects high expectations, leaving limited margin of safety.
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TEM 12-Month Price Forecast
Tempus AI is a high-growth, high-risk company at the intersection of healthcare and AI, with a promising long-term vision but significant near-term challenges. The stock has rallied 23.7% in the past month, yet it remains 26.5% below its 52-week high, reflecting ongoing skepticism. The valuation is stretched (P/B 20.94, EV/sales 10.08), and profitability is elusive, with negative free cash flow. The bull case hinges on the Personalis acquisition and continued revenue acceleration, while the bear case focuses on cash burn and competitive threats. Given the balanced risk/reward, a neutral stance is warranted. I would upgrade to bullish if the company reports positive free cash flow and net income for two consecutive quarters, or if the stock corrects to a more attractive valuation. I would downgrade to bearish if revenue growth falls below 15% or if cash reserves deplete faster than expected.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Tempus AI's 12-month outlook, with a consensus price target around $70.06 and implied upside of -0.4% versus the current price.
Average Target
$70.06
0 analysts
Implied Upside
-0.4%
vs. current price
Analyst Count
—
covering this stock
Price Range
$35 - $100
Analyst target range
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Bulls vs Bears: TEM Investment Factors
The bull case for Tempus AI rests on accelerating revenue growth (21.6% YoY), improving gross margins (64.45%), and the transformative potential of the Personalis acquisition, which could solidify its leadership in precision medicine. However, the bear case is equally compelling: persistent GAAP losses, negative free cash flow of -$273M, and a premium valuation (P/B of 20.94) that leaves little room for error. The stock's beta of 3.72 and max drawdown of -59.76% underscore the extreme volatility. Currently, the bear evidence appears stronger on fundamentals, but the bull narrative is gaining traction with recent price momentum (+23.7% in 1M). The single most important tension is whether Tempus can achieve sustainable profitability before cash reserves dwindle, or if it will need to raise dilutive capital. Resolution of the Personalis deal and Q3 earnings will be critical in tipping the scales.
Bullish
- Revenue Growth Accelerating: Q2 2026 revenue of $382.5M grew 21.6% YoY, up from $314.6M in Q2 2025, and represents the highest quarterly revenue in the company's history. The sequential increase from Q1 2026's $348.1M shows sustained momentum despite a challenging macro backdrop.
- Gross Margin Expansion: Gross margin improved to 64.45% in Q2 2026 from 61.99% in Q2 2025 and 60.69% in Q1 2025, reflecting better operating leverage as the data platform scales. This 246 basis point YoY improvement suggests the business model is becoming more efficient.
- Analyst Consensus Buy Rating: 18 analysts cover TEM with a consensus recommendation of 'buy' (mean 2.2) and an average target price of $70.06, implying 8.6% downside from the current $76.63. However, the high target of $100 suggests significant upside potential if execution remains strong.
- Personalis Acquisition Catalyst: The pending Personalis acquisition, highlighted in recent news, could materially expand Tempus's precision medicine footprint and data moat. Bulls argue this deal transforms the company's competitive positioning in oncology diagnostics.
Bearish
- Persistent GAAP Losses: Despite Q2 2026 net income of $5.6M, the company reported a net loss of $125.9M in Q1 2026 and $54.2M in Q4 2025. Trailing twelve-month EPS is -$0.02, and operating margin remains negative at -19.9%, indicating core operations are not yet profitable.
- Extreme Valuation Multiples: Price-to-book ratio of 20.94 and EV/sales of 10.08 are exceptionally high for a company with negative net margins (-19.3%). The forward PE is negative, and the PEG ratio of 0.60 is misleading given the lack of positive earnings.
- High Volatility and Drawdown Risk: Beta of 3.72 means the stock is nearly four times as volatile as the market. The max drawdown of -59.76% over the past year illustrates the severe downside risk, with the stock currently 26.5% below its 52-week high of $104.32.
- Negative Free Cash Flow: TTM free cash flow is -$273.0M, indicating the company is burning cash to fund operations and growth. This raises concerns about the sustainability of the business model without continued external financing.
TEM Technical Analysis
Beta
3.54
3.54x market volatility
Max Drawdown
-59.8%
Largest decline past year
52-Week Range
$41-$104
Price range past year
Annual Return
-24.4%
Cumulative gain past year
| Period | TEM Return | S&P 500 |
|---|---|---|
| 1m | +8.9% | +0.9% |
| 3m | +14.4% | +3.4% |
| 6m | +63.8% | +14.4% |
| 1y | -24.4% | +16.2% |
| ytd | +12.8% | +14.0% |
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TEM Fundamental Analysis
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?
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 & Operational Risks: Tempus AI faces significant financial risks stemming from its persistent GAAP losses and cash burn. Despite Q2 2026 net income of $5.6M, the company reported a net loss of $125.9M in Q1 2026, and TTM free cash flow is -$273.0M, indicating that operations are not self-sustaining. The debt-to-equity ratio of 2.70 is elevated, and while the current ratio of 3.13 provides short-term liquidity, continued losses could strain the balance sheet. Additionally, heavy reliance on stock-based compensation (SG&A of $225.8M in Q2 2026) dilutes shareholders and obscures true cash expenses. Operational risks include integration challenges from the pending Personalis acquisition and the need to scale the data platform profitably. Margin pressure is evident as operating margin remains negative at -19.9%, and the company must continue to grow revenue at a rapid pace to cover fixed costs. Revenue concentration in oncology diagnostics and data monetization exposes the company to shifts in healthcare spending and reimbursement policies.\n\nMarket & Competitive Risks: Tempus operates in the highly competitive precision medicine and healthcare AI space, facing entrenched diagnostic incumbents and emerging AI-driven competitors. The stock's beta of 3.72 makes it extremely sensitive to market rotations, as evidenced by the -59.76% max drawdown over the past year. Valuation compression risk is acute: the price-to-book ratio of 20.94 and EV/sales of 10.08 are premium multiples that assume flawless execution. Any slowdown in revenue growth or margin expansion could trigger a sharp de-rating. Regulatory headwinds, including potential changes to reimbursement for genomic testing, pose a threat. Recent news highlights a market rotation out of high-flying tech into defensive sectors, which could disproportionately impact high-beta names like TEM. The competitive landscape is intensifying, with Pathos AI's acquisition of DeuterOncology validating AI-driven oncology asset identification, signaling more competition for data and partnerships.\n\nWorst-Case Scenario: The most damaging scenario would be a combination of slowing revenue growth, widening losses, and a failed or dilutive Personalis acquisition. If revenue growth decelerates below 15% and free cash flow remains negative, the company may need to raise capital at unfavorable terms, further pressuring the stock. In this adverse scenario, the stock could retest its 52-week low of $40.77, representing a decline of approximately 46.8% from the current price of $76.63. The analyst low target of $35 implies an even steeper 54.3% downside. Given the max drawdown of -59.76% over the past year, investors could lose more than half their investment if sentiment turns bearish. The lack of dividend and negative earnings provide no cushion, making the downside risk substantial.
FAQ
The key risks for TEM are ranked as follows: 1) Financial risk: The company burns cash, with TTM free cash flow of -$273M, and has a debt-to-equity of 2.70, which could force dilutive financing. 2) Valuation risk: Trading at 20.94 times book and 10.08 times EV/sales, any slowdown in growth could trigger a sharp de-rating. 3) Competitive risk: The precision medicine space is crowded, and competitors like Pathos AI are advancing; Tempus must continuously innovate to maintain its edge. 4) Macro risk: With a beta of 3.72, the stock is highly sensitive to market rotations, as seen in the -59.76% max drawdown. Additionally, integration risk from the Personalis acquisition could disrupt operations and distract management.
Our 12-month forecast for TEM includes three scenarios: Bull case (25% probability) with a target range of $100-$110, assuming successful Personalis integration and accelerating growth; Base case (50% probability) with a target range of $65-$75, assuming steady growth but continued losses; and Bear case (25% probability) with a target range of $35-$45, assuming decelerating growth and cash burn. The base case is most likely, anchored by the analyst average target of $70.06. The key assumption is that revenue growth remains above 18% and gross margin stays above 63%. However, given the high volatility, actual results could deviate significantly.
TEM appears overvalued on most traditional metrics. Its price-to-book ratio of 20.94 and EV/sales of 10.08 are significantly higher than the healthcare sector average, reflecting lofty growth expectations. The forward PE is negative, and the trailing PE is -41.88, indicating no earnings to support the valuation. The PEG ratio of 0.60 might suggest undervaluation, but this is misleading because it is based on future earnings estimates that are not yet realized. Compared to its own history, the stock is trading at a premium to its 52-week low of $40.77 but a discount to its high of $104.32. The market is pricing in flawless execution and rapid profitability, leaving little room for error. A more reasonable valuation would require either significant earnings growth or a price correction.
Whether TEM is a good buy depends on your risk tolerance and investment horizon. The stock has a consensus 'buy' rating from 18 analysts with an average target of $70.06, implying 8.6% downside from the current $76.63, but a high target of $100 suggests 30.5% upside. The company is growing revenue at 21.6% YoY with a 64.45% gross margin, but it remains unprofitable with a net margin of -19.3% and negative free cash flow of -$273M. The beta of 3.72 means it is highly volatile, and the max drawdown of -59.76% shows the potential for severe losses. For aggressive investors seeking exposure to AI in healthcare, TEM could be a speculative buy on dips, but conservative investors should avoid until profitability is demonstrated.
TEM is more suitable for long-term investment by risk-tolerant investors, but it can also be traded short-term given its high volatility. The company is in a growth stage, reinvesting heavily in R&D and sales, with no dividend and negative earnings, so it offers no income. The beta of 3.72 and max drawdown of -59.76% indicate that short-term trading carries substantial risk. For long-term investors, the thesis relies on Tempus becoming a profitable leader in precision medicine, which may take several years. A minimum holding period of 3-5 years is recommended to ride out volatility and allow the business to mature. Short-term traders should use tight stop-losses and be aware of event-driven risks like earnings and acquisition news.
