Strategic Deals Drive TEM Growth Amid Competition: Buy, Hold or Sell?

Tempus AI, Inc. TEM continues to strengthen its position in precision medicine through strategic acquisitions. In a move to expand its digital pathology capabilities, the company announced the $81.25 million acquisition of Paige, a leader in AI-driven pathology solutions. This follows its earlier purchase of Deep 6 AI in March, a precision research platform that broadens Tempus’ reach across healthcare and life sciences. The acquisition of Deep 6 AI enhances Tempus’ Next platform for patient care and its TIME network that accelerates clinical trial matching. Together, these acquisitions bolster Tempus’ technology portfolio. 

Rivals of Tempus are equally leaning on acquisitions to sharpen their growth. Labcorp LH maintains a solid pipeline of potential acquisitions that fit its financial strategy and will enhance its organic growth. Some of the transactions announced include the acquisition of select oncology and clinical testing assets from BioReference Health and the acquisition of key clinical and anatomic pathology assets from Incyte Diagnostics. 

Meanwhile, GE HealthCare GEHC continues to leverage acquisitions and strategic partnerships to expand capabilities, strengthen recurring revenue streams, and advance its precision care strategy. The company completed the acquisitions of MIM Software and Intelligent Ultrasound’s AI software business and completed the acquisition of Nihon Medi-Physics in Japan.

TEM Stock's Price Performance

In the past year, Tempus stock has managed to post gains in 2025, climbing 113.8%. LH stock has gained 26.6%, while GEHC has lost 17.3%. By comparison, the broader Zacks Medical sector has lost 11.4% and the S&P 500 benchmark has advanced 15% in the same time frame.

TEM’s 1 Year Price Performance Comparison

Image Source: Zacks Investment Research

TEM’s Wide-Ranging Product Launches Propel Growth

Tempus continues to push the boundaries of precision medicine through a robust pipeline of research and development (R&D) initiatives. In June, the company introduced xM, a liquid biopsy assay to detect molecular response to immune-checkpoint inhibitor therapy in advanced solid tumors. In May, TEM launched its Fuses program to generate valuable insights for both patient care and research. Fuses will accelerate the company’s comprehensive testing portfolio, expanding its suite of AI-enabled diagnostics. In April, Tempus announced Tempus Loop, a new oncology-focused platform for target discovery and validation. Loop is its proprietary approach to novel target identification that integrates real-world patient data with human-derived biological models and CRISPR screens, all leveraging AI to rapidly uncover insights for preclinical therapeutic development.

TEM’s Strong Operational Performance

Tempus reported an improvement in net loss of $42.8 million in the second quarter of 2025 compared with the year-ago quarter’s net loss of $552.2 million. Quarterly gross profit rose sharply to $195 million, up 160% year over year, reflecting improved cost management and a shift toward higher-margin products. Operational efficiency also improved significantly, with adjusted EBITDA narrowing from a negative $16 million in first-quarter 2025 to a negative $5.6 million in second-quarter 2025, demonstrating stronger cost discipline and operational leverage as the company scaled.

TEM’s EPS Growth

In 2025, Tempus is expected to experience 81.2% growth in revenues. On the profitability front, earnings per share are expected to remain negative, but with an improvement of 56.3% year over year. In the past 30 days, Tempus’ loss per share estimate for 2025 has remained unchanged at 69 cents. 

Image Source: Zacks Investment Research

Key Challenges for TEM

Although Tempus has developed and published several advanced AI-driven diagnostic algorithms, the absence of reimbursement frameworks for such tools within the U.S. healthcare system poses a significant structural hurdle. As a result, these innovations, being scientifically validated and clinically promising, have yet to translate into meaningful financial returns. In addition, Tempus currently holds a competitive edge with limited direct rivals in the AI and data analytics space. However, this advantage may narrow as more genomic and technology companies expand into the field, intensifying competition in the years ahead.

TEM Shares Look Overvalued

Tempus stock is not so cheap, as suggested by the Value Score of F.

TEM is currently trading at a 12-months forward price-to-sales (P/S) of 10.83X, which is higher than the industry average of 5.88X.

Image Source: Zacks Investment Research

Here’s How to Play Tempus Stock Now

Tempus AI stands at a pivotal stage of growth, combining strategic acquisitions, product innovation, and improving financial performance to solidify its leadership in precision medicine. Its expanding ecosystem — from advanced liquid biopsy assays to AI-powered pathology and clinical data platforms — positions the company to capitalize on the accelerating convergence of genomics, data science, and healthcare. However, sustained success will depend on navigating reimbursement challenges, maintaining technological differentiation, and executing efficiently as competition in AI-driven diagnostics intensifies.

With TEM shares already trading at elevated levels, we advise those who already have this Zacks Rank #3 (Hold) stock in their portfolios to maintain their position, while others may wait for a more favorable entry point. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research