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Tempus AI has rapidly become one of the flagship “AI in healthcare” names, with the stock delivering a powerful run since going public and sentiment shifting from discovery to execution. As of early 2026, the market is treating it less like a speculative genomics upstart and more like a high‑beta leader where much of the easy upside has already been repriced.

From our deep dive into the filings, earnings releases, and industry data, we think that’s the right framing. At roughly $66 per share and about a $11.4 billion market cap, the stock already embeds very optimistic assumptions about sustained 25–30%+ revenue growth, clean integration of recent acquisitions, and a steady march toward profitability. For investors, the core question isn’t “Is this a good company?”—it’s whether the current price still offers an attractive risk/reward over the next 6–18 months.

Our answer: Tempus looks more like a potential trim or hold than a fresh buy at today’s levels. The underlying platform merits a premium, but we don’t see a robust margin of safety. We’d rather wait either for a pullback into the mid‑$50s or for clearer, sustained evidence of margin expansion before getting more aggressive.

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What does Tempus AI actually do?

Tempus AI positions itself as an AI‑native precision‑medicine platform rather than “just” a genomics lab. The company combines next‑generation sequencing, pathology, imaging, and longitudinal clinical data to support personalized care, initially in oncology and increasingly in cardiology and other specialties. According to the company’s Q4 2024 results and business overview (Feb 2025), it operates three main product lines:

Genomics (clinical testing) – tumor profiling, hereditary cancer testing, and related assays
Data & services (Insights and Trials) – de‑identified data licensing and clinical trial services
AI Applications – algorithmic tools and software like ECG‑AF, clinical decision support, and the consumer‑facing assistant “olivia”

Tempus runs CLIA‑certified labs and a cloud‑based data platform that connects to thousands of institutions. The company says it now serves more than 7,000 physicians and is plugged into over 65% of U.S. academic medical centers and more than half of practicing oncologists in the U.S., according to FierceHealthcare’s coverage of its IPO filing (May 2024). That clinical footprint, combined with biopharma contracts with about 95% of the largest public pharma companies, is the backbone of its data advantage.

Recent acquisitions—Ambry Genetics for hereditary testing and Paige for digital pathology—further broaden the data and testing footprint. Management’s stated goal is to create an integrated multimodal platform where each additional test or data feed increases the value of the entire ecosystem.

How fast is Tempus AI growing—and at what cost?

To understand whether the stock is priced sensibly, we have to separate the business from the valuation.

On the business side, growth has been legitimately strong. Revenue climbed from $532 million in 2023 to $693.4 million in 2024, a 30.4% increase, per the 2024 results release (Feb 2025). Management then guided to approximately $1.265 billion in 2025 revenue—about 80% growth, largely reflecting the impact of the Ambry deal combined with ongoing organic expansion, as noted in Q2 2025 commentary (Aug 2025).

By Q3 2025, Tempus had:

Quarterly revenue of $334.2 million, up 84.7% year over year
Genomics revenue of $252.9 million and Data & services revenue of $81.3 million
Slightly positive adjusted EBITDA at $1.5 million

Those figures come directly from the Q3 2025 10‑Q (Nov 2025) and the matching earnings release (Nov 2025).

But the income statement still tells a more sobering story:

Q3 2025 loss from operations: $61.0 million
Q3 2025 net loss: $80.0 million
Net loss for the first nine months of 2025: $190.9 million
Net cash used in operating activities over those nine months: $181.3 million

Stock‑based compensation (SBC) remains substantial. For the nine months ended September 30, 2025, SBC was $79.4 million, with another $296.8 million in unrecognized SBC to be expensed over roughly 2.5 years, according to the same 10‑Q (Nov 2025). Accumulated deficit has reached around $2.3 billion.

Put bluntly: Tempus has crossed into marginally positive adjusted EBITDA, but economic profitability (GAAP earnings and free cash flow) is still a long way off.

Will Tempus AI deliver long‑term growth?

We think the long‑term growth story is credible, but not guaranteed.

Industry tailwinds are real. Precision oncology and molecular diagnostics are growing, with U.S. oncology precision genomic testing expected to grow at roughly mid‑teens CAGRs, according to Grand View Research’s oncology genomic testing outlook (Jan 2025) and broader precision oncology estimates in their 2030 market forecast (Jan 2025). Rising cancer incidence, biomarker‑driven therapies, and minimal residual disease (MRD) monitoring all support higher overall test volumes, as also highlighted by DataM Intelligence’s oncology diagnostics market analysis (Nov 2025).

Tempus has been gaining share on top of that rising tide:

2024 revenue growth of 30.4% vs a market growing closer to mid‑teens
Q3 2025 gross profit growth of 98.4% year over year, faster than revenue, according to Q3 2025 results (Nov 2025)
217,000 clinical tests delivered in Q3 2025, up 33% year over year, per the same Q3 release (Nov 2025)

On the biopharma side, Tempus reported 140% net revenue retention and $940 million of remaining contract value at year‑end 2024, signaling strong expansion across existing contracts. Those metrics are detailed in the Q4 2024 results and 2025 outlook (Feb 2025).

The big strategic swing is the AstraZeneca/Pathos foundation‑model agreement, a multi‑year $200 million deal to co‑develop oncology foundation models and the Fuses platform. This is described in detail in Tempus’s expanded strategic agreements release (Apr 2025) and Fuses program launch (May 2025). If this and similar deals become repeatable patterns, Tempus can tilt more of its mix toward high‑margin data and AI revenue.

At the same time, the industry is highly competitive and regulated. Guardant Health, Natera, Caris, and others are pushing hard in oncology diagnostics and liquid biopsy, while players like IQVIA, Flatiron, and ConcertAI fight for pharma data and services dollars. Regulatory burden for AI devices is rising as the FDA builds out its framework for software as a medical device, as evidenced by Tempus’s own clearances for ECG‑AF and xR IVD in the 510(k) approval releases (Jun 2024) and (Sep 2025).

Our takeaway: Tempus can grow high‑teens to mid‑20s annually for several years if it executes well. But the stock requires more: it effectively assumes sustained 25–30%+ growth and a smooth profitability curve.

How strong is Tempus AI’s moat?

Tempus’s most credible source of competitive advantage is its multimodal data and workflow integration.

Management describes a dataset with tens of millions of de‑identified records across genomics, imaging, and clinical data, with live data pipes from roughly 3,000–4,000 provider institutions. That embedded footprint is laid out in the Q4 2024 results and platform overview (Feb 2025) and reinforced in the Fuses launch materials (May 2025).

Each incremental test and integration does three things:

1. Improves foundation models and algorithms

2. Expands the breadth and depth of data that biopharma can license

3. Raises switching costs for clinicians and hospitals embedded in Tempus’s workflows

Evidence that this is turning into a moat includes:

140% net revenue retention and $940 million of remaining contract value in Data & services, per the Q4 2024 release (Feb 2025)
Multiple FDA‑cleared AI diagnostics (xT CDx, ECG‑AF, Pixel, xR IVD), documented in the ECG‑AF clearance (Jun 2024) and xR IVD clearance (Sep 2025)
Gross profit growing faster than revenue in 2024 and Q3 2025, suggesting some early operating leverage

Where we remain cautious is on economic durability. A true moat should eventually show up as strong, defensible returns on capital and sustainable free cash flow. Tempus isn’t there yet. Goodwill ballooned to $465.1 million by September 30, 2025, largely from Ambry and Paige, per the Q3 2025 10‑Q (Nov 2025). If synergies disappoint or reimbursement tightens, those assets could be impaired.

In other words: the strategic moat looks promising; the financial moat is unproven.

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Is TEM stock a buy in 2026—or time to trim?

Our internal rating on Tempus is “POTENTIAL SELL” with a conviction score of 4.0/5. That doesn’t mean we dislike the business; it means that at the current price, we think the balance of upside vs downside over the next 6–18 months is skewed against new buyers.

Here’s how we frame scenarios:

Base case (45% probability) – Implied value around $65

In our base case, Tempus’s core oncology and hereditary testing businesses mature closer to overall market growth while Data & services continues to grow faster and slowly improves the margin mix. We model:

Revenue growth of roughly 22–25% annually through 2027
Adjusted EBITDA hovering slightly positive, with modest margin expansion
No major reimbursement shocks, but no big upside surprises beyond existing contracts either

On this path, we see fair value in the mid‑$60s, roughly in line with the current price. That supports a hold/trim stance rather than an aggressive buy.

Bull case (25% probability) – Implied value around $85

In the bull case, large data deals and AI Applications scale faster than expected:

Revenue compounds at 30%+ for several years
Adjusted EBITDA margins move above 10% as data and software become a larger share of revenue
Ambry and Paige integrations deliver visible synergies, with improved hereditary and pathology margins and cross‑sell into the oncology base

If those things happen, we see a path to roughly $85 over 18–24 months. But this scenario requires Tempus to meet or exceed already high market expectations.

Bear case (30% probability) – Implied value around $45

In the downside scenario, the risks we’re worried about show up:

Revenue growth slows into the mid‑teens by 2026–2027
Adjusted EBITDA turns negative again as integration friction, sales‑force disruption, or reimbursement pressure bite
Payers push back on pricing for xT CDx, hereditary tests, or new MRD/xR assays, compressing gross margins

Under that setup, a re‑rating into the mid‑$40s would not surprise us, especially given limited asset‑based downside protection and high SBC‑driven dilution.

Taken together, the expected value skews toward neutral to slightly negative from current levels. Upside to $85 is real but not dramatically larger than potential downside to the $40s–$50s, and the base case points roughly where the stock already trades.

Margin of safety: what protects you if things go wrong?

For value‑oriented investors, the key issue is the margin of safety, and here Tempus scores poorly at today’s valuation.

The numbers:

Market cap: roughly $11.4 billion
P/E: about ‑56.9 (negative earnings)
EV/EBITDA: about ‑19.7 (negative EBITDA on a trailing GAAP basis)

These valuation markers are drawn from the financial summary in our dataset and cross‑checked against the Q3 2025 10‑Q (Nov 2025). They tell us the stock is not priced on what Tempus is, but on what it might become.

The balance sheet offers limited hard‑asset support:

Cash, cash equivalents and restricted cash: $660.5 million
Cash plus marketable securities: $764.3 million
Total assets: $2.28 billion
Liabilities: $1.77 billion
Shareholders’ equity: $507.8 million
Goodwill alone: $465.1 million

All of these figures come from the Q3 2025 10‑Q (Nov 2025).

Liquidity is decent thanks to the $750 million convertible notes issuance, which refinanced higher‑cost term loans into 0.75% convertible senior notes, as detailed in Davis Polk’s transaction summary (Jul 2025). That buys time, but doesn’t create valuation downside support.

The true margin of safety is entirely growth‑ and margin‑driven: you’re betting that Tempus will execute close to the bull/base ranges, not that you’ll be rescued by asset value if the story disappoints.

Sentiment and crowding: is too much optimism already priced in?

Market sentiment around Tempus has evolved noticeably over the past year.

Early in 2025, coverage emphasized the huge growth runway and “AI genomics disruptor” narrative—Tempus as a high‑growth platform still underappreciated by the market. That tone showed up in pieces like Zacks’ mid‑year look at Tempus’s raised outlook (Jul 2025) and TipRanks’ coverage of strong Q1 results (Apr 2025).

By late 2025, the narrative had shifted. Articles from outlets like Zacks and Nasdaq began asking whether Tempus was now closer to fully valued, with mid‑teens percentage upside to price targets and a “hold unless you’re already in” posture, as reflected in Zacks via Nasdaq’s December 2025 piece on valuation and risks and Zacks’ separate discussion of the post‑run setup (Dec 2025).

Algorithmic and factor‑based ratings have grown more cautious as well. Some services pair bullish narratives with more neutral or even “sell”‑style quantitative scores due to profitability and balance‑sheet risk, as summarized in TipRanks’ stock analysis (Nov 2025) and Zacks’ quantitative commentary (Jul 2025).

What this signals to us:

Crowded long: Tempus is now a known AI‑healthcare leader, not a hidden gem.
High bar on earnings: The stock has shown it can fall even on “beats” if guidance or margin progression disappoints, as noted in Investing.com’s Q3 2025 earnings recap via TipRanks (Nov 2025).
Expectation pull‑forward: Multiple outlets highlight that the 2025 share‑price surge has likely pulled forward a lot of future returns.

Crowded winners can keep winning, but they also become more fragile when the story wobbles. That’s exactly why we’re more cautious here.

Key risks and what to monitor in 2026

We think it’s useful to separate thesis breakers from early warning signs.

Thesis breakers (what would clearly invalidate the current valuation)

From our perspective, these would be red flags:

Growth falls below ~25% in 2026–2027 on an organic, acquisition‑normalized basis without obvious one‑off factors, indicating Tempus is converging to market growth and losing share. This would contradict the premium growth thesis underlying a 17x sales multiple, and should be visible in upcoming results like the next 10‑K/10‑Q cycle described in Q2 2025 guidance commentary (Aug 2025).
Adjusted EBITDA turns negative again for at least three consecutive quarters due to reimbursement pressure or integration failure, undermining confidence in the path to profitability. This risk is explicitly flagged in the Q3 2025 results discussion (Nov 2025).
Goodwill impairments on Ambry/Paige or adverse regulatory/reimbursement decisions for key assays like xT CDx or ECG‑AF by 2027, which would signal that Tempus overpaid or that its regulatory edge is weaker than assumed. The magnitude of goodwill on the balance sheet makes this non‑trivial, per the Q3 2025 10‑Q (Nov 2025).

Early warning indicators (what we’d watch quarter by quarter)

We’d keep an especially close eye on:

Clinical volume and Data & services growth: If test volumes or Data & services revenue slow into the low‑ to mid‑teens, around or below market growth, that suggests share gains are stalling. This can be tracked through segment details in quarterly releases like Q3 2025 results (Nov 2025) and market context from Grand View Research’s U.S. precision oncology outlook (Jan 2025).
Operating expenses (ex‑SBC) as a percentage of revenue: If this ratio rises for two or more consecutive quarters, it indicates diseconomies of scale and integration drag rather than leverage, which would show up in the detailed expense breakdowns of filings like the Q3 2025 10‑Q (Nov 2025).
Data deal flow and transparency: A lack of new large (≥$100 million) multi‑year contracts or limited updates on progress with AstraZeneca/Pathos could indicate weaker demand for the platform, something we’d cross‑check against announcements like the expanded AstraZeneca/Pathos agreements (Apr 2025).

On the flip side, new large data deals and clear FDA and reimbursement wins for xF or additional xR indications would strengthen the bull case, as suggested in Nasdaq’s October 2025 coverage of upcoming catalysts.

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How we’d approach Tempus AI as investors

Putting all of this together, here’s how we, as the DeepValue team, would think about Tempus in a real portfolio.

Position sizing and entry points

At current levels, Tempus does not offer a classic value investor’s margin of safety. The thesis is almost entirely dependent on executing a high‑growth, high‑margin plan in a competitive, regulated space.

Our framework:

We’d be inclined to trim or hold rather than add aggressively above roughly $80, which is where our bull case starts to get fully priced.
We see the mid‑$50s as a more interesting zone to start building or adding to a position, assuming fundamentals haven’t materially deteriorated. That level better compensates you for integration, reimbursement, and crowding risk.
Even at a more attractive entry, we’d likely size Tempus as a higher‑risk growth position, not a core defensive holding.

What would make us more bullish?

We’d increase conviction if, over the next 12–18 months, we saw:

Sustained 30%+ revenue growth at the consolidated level, with clear disclosure that organic growth (excluding acquisitions) remains robust
Adjusted EBITDA margins grinding consistently higher into the mid‑ to high‑single digits, then toward 10%+
Concrete evidence of Ambry and Paige synergies: improving hereditary and digital pathology gross margins, lab consolidation, and clear cross‑sell success
Additional large‑scale data contracts, broadly similar to the $200 million AstraZeneca/Pathos foundation‑model deal, with transparent milestones and economics, as outlined in the April 2025 strategic agreements release

What would push us toward exiting?

We’d seriously reconsider any position if we saw:

Several quarters with revenue growth slipping into the teens without a compelling narrative for re‑acceleration
A renewed slide into negative adjusted EBITDA while SBC remains heavy
Signs that major pharma contracts are being renewed on meaningfully weaker terms, or not renewed at all
Any material goodwill impairment tied to Ambry or Paige, which would imply the acquisition‑driven platform story was over‑optimistic

Final thoughts

Tempus AI is exactly the kind of company that excites the market in an AI‑driven cycle: huge addressable market, strong growth, deep data assets, and a plausible path to becoming core infrastructure in oncology and beyond. We agree that the business warrants a premium multiple relative to slower‑growing diagnostics or lab peers.

Where we diverge from the crowd is on how much of that future should already be discounted today. With the stock trading around 17x 2025 sales and expectation‑laden narratives dominating coverage, we don’t see a compelling 6–18 month risk/reward skew for new entrants at current prices.

For investors who already own the stock with substantial gains, we think it’s reasonable to:

Trim exposure gradually into strength or above our internal trim band
Continue to hold a sized‑down position if you believe in the long‑term platform story
Keep a close eye on the specific KPIs we outlined—growth, margins, data contracts, and integration progress

For those watching from the sidelines, patience may be your friend. Either a valuation reset or a few more quarters of demonstrated margin expansion could create a better entry point.

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Tempus AI, Inc. (TEM) Deep Research Report: Lofty Growth Expectations Meet Execution Risk in 2026