Tempus AI TEM, an innovator in artificial intelligence-based healthcare solutions, has been attracting investors' interest since its successful initial public offering in June 2024. The stock has experienced a significant year-to-date rally of 91.8%, positioning it among the top-performing healthcare stocks in 2025. Its robust first-quarter 2025 results last week, combined with industry tailwinds, are driving the stock’s upward momentum.
Year to date, the stock has outperformed the 19.6% rise of the Medical Info Systems industry and the Medical sector’s 6% decline. In the meantime, the benchmark S&P 500 has edged down 0.1%. The company has also outperformed other players in the health infotech field, like iRhythm Technologies IRTC and SOPHiA GENETICS SOPH, which improved 55.8% and 0.01%, respectively, during the said period.
YTD Share Price Comparison
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It's now essential to determine whether Tempus AI still offers upside potential or if it's time to lock in gains and exit position. Let's find out.
Key Q1 Takeaways
In the first quarter of 2025, Tempus AI delivered a 75.4% year-over-year revenue increase, surpassing the Zacks Consensus Estimate, alongside a 99.8% rise in gross profit.
Genomics revenues registered 89% growth year over year. Within this segment, Tempus AI’s core clinical diagnostics business grew 31% year over year, supported by a 20% volume expansion. Meanwhile, hereditary testing, stemming from the legacy Ambry Genetics business, contributed $63.5 million in revenues and experienced 23% growth in testing volume. The company’s data and services revenues also saw significant momentum, rising 43% year over year, banking on 58% growth in the Insights business.
The company reported an adjusted EBITDA loss of $16.2 million, a substantial improvement from $43.9 million loss in the same period last year. Adjusted net loss also narrowed significantly to 24 cents per share compared with a loss of $1.03 per share a year ago.
AI Collaboration With AstraZeneca and Pathos
Tempus AI reached a major milestone with a $200 million, three-year deal with AstraZeneca AZN and Pathos to build the world’s largest oncology foundation model using over 300 petabytes of multimodal data. This deal raised Tempus AI’s total remaining contract value to over $1 billion and highlights its growing role in AI-powered healthcare. Since the agreement is non-exclusive, Tempus AI can also partner with other companies in the future. Overall, the deal positions Tempus AI as a key player in the precision diagnostics and cancer drug development space.
Furthermore, the company's acquisition of Ambry Genetics and the launch of AI-driven initiatives like the “olivia” personal health concierge app have expanded its capabilities and market reach.
Revenue Guidance Raised, Expects Positive EBITDA
Tempus AI raised its full-year 2025 revenue outlook to $1.25 billion, signaling 80% year-over-year growth. The company also expects positive adjusted EBITDA of $5 million for full-year 2025, up approximately $110 million over 2024.
Trump's Healthcare Focus Order to Add More Impetus
President Donald Trump’s new executive order aims to cut U.S. drug prices by matching them to the lowest prices in other developed countries under the “Most Favored Nation” policy. It directs the Department of Health and Human Services to negotiate lower prices within 30 days, with possible actions like increased imports or tighter regulations if companies do not comply. While implementation may face legal hurdles, the move could benefit Tempus AI. As drugmakers seek to lower costs and prove value, TEM’s AI-driven diagnostics and real-world data tools are well-positioned to help optimize clinical trials and support pricing decisions in a more cost-focused market.
Is There More Upside for TEM?
Despite the recent gains, Tempus AI still trades 29.2% below its 52-week high of $91.45, with a low of $22.89 during the same period, indicating there is still considerable room for upward movement as momentum builds.
On the other hand, the short-term price target offered by 10 analysts represents a decline of 10.75% from the last closing price of $68.91.
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Is TEM Fairly Valued?
TEM stock is currently slightly overvalued compared to its industry, as shown in the chart below.
The company is currently trading at a forward 12-month price-to-sales (P/S) ratio of 8.21, a premium to the broader industry's average of 6.0 and in line with the stock’s one-year median. The stock is also trading higher than other industry players like iRhythm (6.08X) and SOPHiA GENETICS (2.5X).
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Tempus AI is a “Hold” for Now
Tempus AI offers strong long-term potential fueled by genomics growth, expanding data services and a major AI partnership with AstraZeneca. However, this Zacks Rank #3 (Hold) stock trades at a premium to peers and faces stiff competition. The company is yet to deliver positive EBITDA or EPS. While macro trends like drug pricing reform aid, much of the optimism is already priced in. For now, current shareholders should hold their positions, while new investors should wait for a better entry point. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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