Tempus AI
TEM
$54.87
+5.64%
Tempus AI is a technology company operating in the healthcare information services industry, focused on building a platform to liberate and operationalize siloed healthcare data. The company positions itself as a disruptor in the medical diagnostics space, leveraging its proprietary Tempus Platform and applying artificial intelligence, including generative AI, to enhance the accuracy and personalization of laboratory tests. The current investor narrative centers on the company's growth trajectory as a recently public entity, with attention focused on its ability to scale its AI-driven diagnostic offerings and demonstrate a path to profitability amidst significant ongoing investments in technology and market expansion.…
TEM
Tempus AI
$54.87
TEM 12-Month Price Forecast
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Tempus AI's 12-month outlook, with a consensus price target around $71.33 and implied upside of +30.0% versus the current price.
Average Target
$71.33
5 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
5
covering this stock
Price Range
$44 - $71
Analyst target range
Analyst coverage for Tempus AI is limited, with only 5 analysts providing estimates, indicating it is a relatively new or niche stock with less institutional following, which can contribute to higher volatility. The consensus sentiment among the few covering firms is bullish, with recent institutional ratings from firms like Guggenheim, Needham, and Morgan Stanley all maintaining 'Buy' or 'Overweight' equivalents, though specific price targets and an implied upside calculation are not available in the provided data. The target price range is also not specified, but the unanimous bullish stance among the handful of analysts suggests they are betting on the company's long-term platform potential and AI-driven growth story, despite the current lack of profitability and high cash burn; the limited coverage itself is a signal that the stock may be under-followed, offering potential for greater price discovery as the company's story develops and attracts more research attention.
Bulls vs Bears: TEM Investment Factors
The bull case for TEM is compellingly grounded in its exceptional 83% revenue growth and 90% gross margins, which validate its disruptive AI platform in healthcare. However, the bear case presents severe counterpoints: deep unprofitability, extreme cash burn (-$404M TTM FCF), and a leveraged balance sheet (D/E of 2.70) create fundamental fragility. Currently, the bearish evidence holds stronger weight due to the stock's severe underperformance, extreme volatility (beta 3.62), and the tangible risk that growth cannot outpace its massive cash consumption. The single most important tension in the investment debate is whether the company's explosive top-line growth (82.98% YoY) can accelerate sufficiently to achieve operating leverage before its financial runway (supported by debt) runs out or investor patience for funding losses evaporates.
Bullish
- Explosive Revenue Growth: Q4 2025 revenue of $367.2 million grew 82.98% year-over-year, accelerating from the prior quarter's $334.2 million. This demonstrates powerful business momentum as the company scales its AI-driven diagnostic platform.
- Exceptional Gross Margins: Q4 2025 gross margin reached 89.74%, showcasing the high-value, scalable nature of its data and AI services. This provides a strong foundation for future profitability once operating leverage is achieved.
- Unanimous Analyst Bullishness: All 5 covering analysts maintain 'Buy' or 'Overweight' ratings, indicating strong institutional conviction in the long-term platform story. Limited coverage suggests potential for positive price discovery as the story gains traction.
- Valuation De-rating from Peak: The current PS ratio of 8.09x is significantly below its recent peak of 28.02x, suggesting much of the speculative premium has been washed out. This creates a more reasonable entry point for a high-growth story.
Bearish
- Deeply Unprofitable with High Burn: The company posted a Q4 net loss of $54.2 million and TTM free cash flow of -$404 million. With an operating margin of -13.13% and ROE of -49.87%, profitability remains a distant prospect.
- Extreme Volatility and Downtrend: A beta of 3.62 makes the stock over 260% more volatile than the market, exacerbating downside risk. The stock is down 26.43% over the past year and 21.13% over six months, underperforming the S&P 500 by over 50 percentage points.
- Leveraged Balance Sheet: A debt-to-equity ratio of 2.70 indicates a leveraged capital structure. This increases financial risk and interest expense burden, which was $99.9 million in Q4, pressuring the path to profitability.
- Premium Valuation Despite Losses: A PS ratio of 8.09x and EV/Sales of 7.15x are elevated for an unprofitable company, requiring sustained hyper-growth to justify. Any growth deceleration could trigger severe multiple compression.
TEM Technical Analysis
The stock is in a pronounced downtrend, evidenced by a 1-year price change of -26.43% and a 6-month decline of -21.13%, significantly underperforming the S&P 500's 24.99% and 9.72% gains over the same periods, respectively. Currently trading at a price of $50.84, the stock sits near the lower end of its 52-week range, which spans from $41.73 to $104.32, indicating it is approximately 17% above its 52-week low and has experienced a substantial drawdown from its highs, suggesting a potential value opportunity but also significant negative momentum. Recent momentum shows a short-term bounce, with a 1-month price increase of 11.66% and a 3-month gain of 8.26%, which diverges positively from the longer-term downtrend; however, this recovery remains fragile as the stock's beta of 3.62 indicates it is over 260% more volatile than the broader market, leading to exaggerated moves in both directions. Key technical support is clearly defined at the 52-week low of $41.73, while resistance lies at the recent high near $70.33; a sustained breakout above this resistance would signal a potential trend reversal, whereas a breakdown below $41.73 could trigger another leg down, with the extreme beta underscoring the heightened risk and potential for outsized price swings inherent in this name.
Beta
3.62
3.62x market volatility
Max Drawdown
-59.0%
Largest decline past year
52-Week Range
$42-$104
Price range past year
Annual Return
-16.2%
Cumulative gain past year
| Period | TEM Return | S&P 500 |
|---|---|---|
| 1m | +17.6% | -2.2% |
| 3m | +28.7% | +15.8% |
| 6m | -12.5% | +6.4% |
| 1y | -16.2% | +20.9% |
| ytd | -12.0% | +7.7% |
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TEM Fundamental Analysis
Tempus AI is demonstrating explosive revenue growth, with Q4 2025 revenue of $367.2 million representing a year-over-year increase of 82.98%; this growth is accelerating from the prior quarter's $334.2 million, indicating strong business momentum, though it is important to note the company is still in a high-investment phase to capture market share. The company remains unprofitable, posting a Q4 2025 net loss of $54.2 million and an operating margin of -13.13%; however, gross margins are robust at 89.74% for the quarter, showcasing the high-value nature of its services, but these are offset by substantial operating expenses as it scales, with the trailing twelve-month free cash flow deeply negative at -$404.0 million. The balance sheet shows a debt-to-equity ratio of 2.70, indicating a leveraged capital structure, while the current ratio of 3.13 suggests ample short-term liquidity; the negative return on equity of -49.87% and negative free cash flow highlight the company's current stage of heavy reinvestment and dependence on external financing to fund its aggressive growth strategy.
Quarterly Revenue
$367211000.0B
2025-12
Revenue YoY Growth
+0.82%
YoY Comparison
Gross Margin
+0.89%
Latest Quarter
Free Cash Flow
$-403985000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
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Valuation Analysis: Is TEM Overvalued?
Given the company's negative net income, the primary valuation metric selected is the Price-to-Sales (PS) ratio. Tempus AI trades at a trailing PS ratio of 8.09x and an EV/Sales of 7.15x, which are elevated multiples that reflect the market's pricing of its high growth rate rather than current profitability. Comparing to industry averages is challenging as specific sector data is not provided in the valuation data, but the high PS ratio typically suggests a premium valuation relative to more mature healthcare IT peers, justified only if the company can sustain its hyper-growth and eventually translate it into profits. Historically, the stock's own PS ratio has fluctuated wildly, from a high of 28.02x at the end of 2025 to much lower levels in prior quarters; the current 8.09x sits well below its recent peak, suggesting some de-rating has occurred, but it remains at a level that implies significant future growth expectations are still baked into the price.
PE
-41.9x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range -105x~0x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
-49.5x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks are severe. The company is deeply unprofitable with a Q4 operating margin of -13.13% and a net loss of $54.2 million. The trailing twelve-month free cash flow burn of -$404.0 million is alarming and indicates a high dependency on external financing. While gross margins are robust at 89.74%, they are completely offset by massive operating expenses ($377.8M in Q4) as the company scales. The debt-to-equity ratio of 2.70 adds significant financial risk, increasing interest expense pressure and limiting financial flexibility if growth stalls.
Market & Competitive Risks are heightened by its valuation and market positioning. Trading at a PS ratio of 8.09x, the stock carries a premium valuation that is entirely predicated on sustaining hyper-growth. A beta of 3.62 means it is over 260% more volatile than the market, making it acutely sensitive to sector rotations and risk-off sentiment, as evidenced by recent news of a shift away from high-growth tech. As a newly public company with limited analyst coverage (5 firms), it lacks the stabilizing institutional following of larger peers, potentially leading to exaggerated price swings on news flow or earnings.
Worst-Case Scenario involves a perfect storm of growth deceleration coinciding with a tightening financial market. If quarterly revenue growth slows meaningfully below 50% while cash burn remains above -$100M per quarter, the company could face a liquidity crunch, necessutive dilutive equity raises or debt restructuring. Investor sentiment, already negative as shown by the 58.96% max drawdown, could completely sour, leading to a re-rating towards a PS multiple of 3-4x for a struggling growth story. This could realistically drive the stock to retest and break its 52-week low of $41.73, implying a downside of approximately -18% from the current ~$50.84. In an extreme adverse scenario, a break below $40 could trigger a decline to the $30-$35 range, representing a loss of 30-40%.
