Is TEM a Buy? What to Consider in 2026
Short answer
The bull case for Tempus AI (TEM) rests on Explosive Revenue Growth with a Clear Path to Profitability: Tempus grew full-year 2025 revenue roughly 83% year-over-year to approximately $1.27 billion, then guided for $1.59 billion in 2026, representing continued strong growth. Revenue (FY2025, reported) is ~$1.27 billion. If you believe that thesis holds, the real questions become position sizing and overlap, not timing. The main risk to that view: Tempus remains unprofitable on a GAAP basis, with a full-year 2025 net loss of $245 million (which included $136 million in stock-based compensation), and the path to sustained GAAP profitability is long; Q1 2026 showed a net loss of $125.9 million, widening 85% year-over-year, and EPS missed analyst estimates by 34%. Whether TEM is a buy comes down to whether you believe the thesis. This is informational, not a recommendation, and Walnut is not an investment adviser.
Tempus AI (NASDAQ: TEM) is a Chicago-based technology company that applies artificial intelligence to precision medicine, primarily in oncology but increasingly across cardiology, neuropsychiatry, and hereditary conditions. It operates two interconnected business lines: a diagnostics segment that performs next-generation sequencing (NGS), PCR profiling, molecular pathology, and hereditary genetic tests through CAP-accredited, CLIA-certified laboratories, charging on a per-test basis; and a Data and Applications segment that licenses de-identified, linked clinical, molecular, and imaging datasets to life sciences companies (Insights), offers clinical trial matching (Trials), and deploys AI-powered algorithm products for physicians (Algos) and an AI platform called Next. Approximately 95% of the top 20 pharmaceutical companies use Tempus data or trial services, and the platform has integrations across more than 7,000 physicians and hundreds of research partners, creating a self-reinforcing network where clinical volume generates data that improves AI models and attracts more customers. Tempus was founded in 2015 by Eric Lefkofsky, a Chicago technology entrepreneur, after his wife's 2014 breast cancer diagnosis exposed how underutilized data and AI were in cancer care. The company initially focused on oncology genomics before expanding into cardiology (through the 2023 acquisition of Mpirik), radiology AI (through the 2022 acquisition of Arterys), digital pathology AI (through the 2025 acquisition of Paige AI), pharmacogenomics (through the 2025 acquisition of OneOme), and hereditary genetics (through the early-2025 acquisition of Ambry Genetics for approximately $600 million). Tempus went public on the Nasdaq in June 2024 under the ticker TEM. Eric Lefkofsky continues to serve as Founder and CEO.
What's the case for buying TEM?
Explosive Revenue Growth with a Clear Path to Profitability
Tempus grew full-year 2025 revenue roughly 83% year-over-year to approximately $1.27 billion, then guided for $1.59 billion in 2026, representing continued strong growth. Adjusted EBITDA improved by approximately $97 million in 2025 to nearly breakeven (negative $7.4 million), and the company guided for positive Adjusted EBITDA of approximately $65 million in 2026, signaling an inflection toward operational profitability.
Data Licensing as a High-Margin Flywheel
The Data and Applications segment, which includes Insights data licensing, grew 31% in 2025 to $316 million and carries higher margins than diagnostics. Because the incremental cost of licensing existing data is low, each new pharma contract adds disproportionately to gross profit. Net Revenue Retention in the Insights product was 140% as of 2024, indicating that existing customers expand their spend substantially year over year.
Network Effects and Moat from Scale
With more than 200 petabytes of multimodal clinical data, over 100 patents protecting core algorithms, and deep EMR integrations that embed Tempus into clinical workflows, the platform becomes harder to displace as it grows. Replicating this scale of longitudinal, linked clinical and molecular data would require years and hundreds of millions of dollars, raising switching costs for both health systems and pharmaceutical partners.
Expanding Addressable Market Beyond Oncology
Through acquisitions of Paige AI (digital pathology), OneOme (pharmacogenomics), and Ambry Genetics (hereditary conditions), Tempus has extended its platform well beyond its oncology roots. The company cites a $70 billion opportunity in biomarker tests across just oncology and neuropsychology, while its pharma partners collectively spent over $262 billion globally on R&D in 2023, a pool from which data and trial services can draw recurring revenue.
What are the risks to TEM?
Tempus remains unprofitable on a GAAP basis, with a full-year 2025 net loss of $245 million (which included $136 million in stock-based compensation), and the path to sustained GAAP profitability is long; Q1 2026 showed a net loss of $125.9 million, widening 85% year-over-year, and EPS missed analyst estimates by 34%. Reimbursement risk is material: a significant portion of Tempus's diagnostics revenue depends on favorable coverage decisions from CMS and private payers, and adverse rulings on NGS tests or laboratory-developed tests (LDTs) could reduce revenue per test sharply. Regulatory scrutiny of LDTs by the FDA, ongoing data privacy obligations under HIPAA, and the risk that competitors such as Guardant Health, Illumina, Roche, or PathAI develop comparable datasets or lower-priced tests could compress both volume growth and pricing power over time.
How is TEM valued? (as of 2026-06-27)
- Revenue (FY2025, reported): ~$1.27 billion
- Revenue (TTM, as of Q1 2026): ~$1.36 billion
- Q1 2026 Revenue (most recent quarter): ~$348 million (up 36% YoY)
- Gross Margin (FY2025): ~63%
- Net Loss (FY2025): ~($245) million (GAAP)
- Adjusted EBITDA (FY2025): ~($7.4) million (near breakeven)
- Market Capitalization: ~$9.0 billion
- Price / Sales (TTM): ~6.6x
- P/E Ratio (TTM): Not meaningful (company not yet profitable)
- 2026 Revenue Guidance: ~$1.59 billion
Tempus trades at roughly 6.6 times trailing twelve-month revenue, a premium that reflects the market pricing in a future where its data-licensing flywheel generates high-margin recurring revenue at scale. The P/E ratio is not meaningful today because the company is not yet GAAP profitable, but consensus estimates suggest the first meaningful earnings could arrive by 2028, and the company's own guidance calls for positive Adjusted EBITDA of approximately $65 million in 2026. The gross margin of approximately 63% is already at software-like levels and has expanded significantly as the higher-margin Data and Applications segment grows faster than diagnostics.
How do you decide if TEM is a buy?
Rather than asking whether TEM is a buy in the abstract, it tends to help to answer four questions:
- Thesis: do you believe the case above, and is it still true today?
- Time horizon: a single stock can be volatile, so a longer horizon absorbs more of the swings.
- Position sizing: a thesis can be right and the sizing still wrong; decide how much of your portfolio one name should be.
- Overlap: check whether you already hold TEM indirectly through an index or sector ETF before adding more.
For the full picture, see the TEM stock guide (what the company does, the ETFs that hold it, similar stocks, and the themes it fits). In Walnut you can ask its AI about TEM against your real portfolio and see your actual exposure before deciding.
The bottom line on TEM
The bottom line: Tempus AI's story right now is Explosive Revenue Growth with a Clear Path to Profitability, with revenue (fy2025, reported) at ~$1.27 billion. If you believe that narrative continues, the call is about sizing TEM sensibly and checking overlap with what you own; if you doubt it (the risk: tempus remains unprofitable on a GAAP basis, with a full-year 2025 net loss of $245 million (which included $136 million in stock-based compensation), and the path to sustained GAAP profitability is long; Q1 2026 showed a net loss of $125.9 million, widening 85% year-over-year, and EPS missed analyst estimates by 34%.), it is not for you. Decide from the thesis, not the ticker. Walnut is not an investment adviser.
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FAQ
Is TEM a good stock to buy right now?
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The case for Tempus AI right now is Explosive Revenue Growth with a Clear Path to Profitability, with revenue (fy2025, reported) at ~$1.27 billion. If you believe that thesis holds, TEM is a way to own it and the real questions are sizing and overlap, not timing; the main risk to that view is tempus remains unprofitable on a GAAP basis, with a full-year 2025 net loss of $245 million (which included $136 million in stock-based compensation), and the path to sustained GAAP profitability is long; Q1 2026 showed a net loss of $125.9 million, widening 85% year-over-year, and EPS missed analyst estimates by 34%. So it comes down to whether you believe the thesis. Walnut is not an investment adviser and this is not a recommendation.
What does Tempus AI do?
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Tempus AI (NASDAQ: TEM) is a Chicago-based technology company that applies artificial intelligence to precision medicine, primarily in oncology but increasingly across cardiology,
What are the main risks of TEM?
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Tempus remains unprofitable on a GAAP basis, with a full-year 2025 net loss of $245 million (which included $136 million in stock-based compensation), and the path to sustained GAAP profitability is long; Q1 2026 showed a net loss of $125.9 million, widening 85% year-over-year, and EPS missed analyst estimates by 34%. Reimbursement risk is material: a significant portion of Tempus's diagnostics revenue depends on favorable coverage decisions from CMS and private payers, and adverse rulings on NGS tests or laboratory-developed tests (LDTs) could reduce revenue per test sharply. Regulatory scrutiny of LDTs by the FDA, ongoing data privacy obligations under HIPAA, and the risk that competitors such as Guardant Health, Illumina, Roche, or PathAI develop comparable datasets or lower-priced tests could compress both volume growth and pricing power over time.
What does Tempus AI actually do?
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Tempus AI runs a two-sided platform in healthcare. On one side, it performs genomic and molecular diagnostic tests (NGS, hereditary genetics, pharmacogenomics) for patients through its CLIA-certified labs, generating revenue per test. On the other side, it licenses the de-identified, linked clinical and molecular data from those tests to pharmaceutical companies, health systems, and researchers who use it for drug development, clinical trials, and AI model training.
Is TEM a good stock to buy right now?
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That depends entirely on an investor's risk tolerance, time horizon, and view on whether Tempus can convert rapid revenue growth into durable profitability. The bull case is a compounding data flywheel in a massive market; the bear case is that the company is not yet GAAP profitable, net losses widened in Q1 2026, and the valuation at roughly 6.6 times trailing revenue already prices in significant success. Neither outcome is certain.
Does TEM pay a dividend?
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No. Tempus AI does not pay a dividend. The company is in a high-growth, pre-profitability phase and retains all available capital for operations, acquisitions, and R&D investment. Investors in TEM are generally seeking capital appreciation from growth, not income from distributions.
Is TEM overvalued?
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At roughly 6.6 times trailing revenue and a not-yet-meaningful P/E, TEM carries a growth premium that assumes strong multi-year revenue compounding and meaningful margin expansion. Whether that is overvalued depends on one's assumptions: bulls point to 63% gross margins, a near-breakeven Adjusted EBITDA in 2025, and a $1.59 billion 2026 revenue guide; bears note a widening GAAP net loss and execution risk on the path to profitability.
Walnut is informational and is not an investment adviser. This page is educational and not a recommendation to buy or sell TEM; figures are approximate and dated, and your own situation, time horizon, and risk tolerance should drive any decision. Verify current data before investing.