Tempus AI Stock Before Q4 Earnings Release: To Buy or Not to Buy?

Tempus AI, Inc. TEM is expected to report fourth-quarter 2025 results on Feb. 24. 

In the last reported quarter, the company’s adjusted loss of 11 cents per share was narrower than the Zacks Consensus Estimate of a loss of 16 cents. Tempus AI, which went public in June 2024, beat on earnings in three of the trailing four quarters and missed in one, the average negative surprise being 6.68%.

The Zacks Consensus Estimate for revenues is currently pegged at $366.8 million for the fourth quarter, implying an 82.8% improvement over the year-ago period.

The Zacks Consensus Estimate for loss per share has remained unchanged at 2 cents over the past 30 days.

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TEM's Earnings Estimate Revision Trend

During the fourth quarter, Tempus share price experienced a 32.9% decline, mainly due to macroeconomic challenges, including escalating trade tensions that broadly impacted the healthcare technology sector. The company witnessed strong momentum, primarily driven by a series of strategic acquisitions and partnerships in the field of AI-driven precision medicine as well as a slew of product launches.

The Zacks Medical Info Systems industry lost 21.6% over the same period. The S&P 500 benchmark index gained 3.3%. Other industry players, such as 10x Genomics TXG and SOPHiA GENETICS SOPH, gained 31.6% and 4.9%, respectively.

Q4 Price Comparison

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Let’s see how things might have shaped up for TEM prior to the announcement:

Key Factors to Note Prior to Tempus AI's Q4 Earnings

In October, Tempus entered a multi-year collaboration with Whitehawk Therapeutics, Inc. WHWK, an oncology therapeutics company applying advanced technologies to established tumor biology to efficiently deliver improved antibody drug conjugates (ADC) cancer treatments. Also, Tempus was selected by the Advanced Research Projects Agency for Health to provide testing and contract research organization (CRO) services in support of the agency’s Advanced Analysis for Precision Cancer Therapy program. These developments might have helped Tempus establish a strong footprint in oncology with an industry-leading technology portfolio.

In the fourth quarter, we expect Tempus’ Genomics segment’s sales to have experienced an improvement from accelerating volume growth in oncology testing and sustained strength in hereditary sequencing. The Data and Services business is likely to have experienced strong demand for Tempus’ proprietary data licensing and AI solutions. 

Insights bookings reached $150 million across multiple new contracts in the third quarter, reflecting 37.6% year-over-year revenue growth, building on the multi-hundred-million-dollar foundation model deal signed earlier in 2025. We expect this trend to have persisted in the to-be-reported quarter. 

Within Genomics, in the previous quarter, Tempus received U.S. FDA 510(k) clearance for its xR IVD to support life sciences drug development programs. The company also launched xM for Treatment Response Monitoring (“TRM”), a new liquid biopsy assay designed to track tumor fraction changes in patients undergoing immune-checkpoint inhibitor (ICI) therapy. We expect these developments to have had a positive impact on the company’s top line. 

Tempus has undertaken several developments within its Data and Services business, which might have boosted growth in the fourth quarter. The company strengthened its data and AI capabilities through the acquisition of Paige, an AI leader in digital pathology, enhancing its dataset, technical expertise, and footprint in this emerging field. It also expanded its collaboration with Northwestern Medicine to integrate David, Tempus’ generative AI clinical co-pilot, into the EHR platform to streamline and transform clinical workflows. 

Tempus Next expanded into breast cancer, offering real-time insights to help clinicians close guideline-based care gaps, underscoring continued innovation across the Data and Services segment.

Tempus AI’s third-quarter gross profit saw 98.4% year-over-year improvement, while adjusted EBITDA finally turned positive, bringing the company within the reach of profitability. It expects slightly positive adjusted EBITDA for full-year 2025 and we expect the company to have progressed meaningfully in the to-be-reported quarter. 

Investments tied to these updates, including product development, regulatory efforts and marketing, are likely to have pushed operating expenses higher in the fourth quarter, putting some pressure on short-term profitability. Broader macroeconomic factors, like tariffs, hospital budget constraints and biotech funding trends, could have also affected adoption rates.

Expensive Valuation

TEM stock is currently overvalued compared to its industry, as shown in the chart below.

TEM is currently trading at a forward 12-month price-to-sales (P/S) ratio of 5.82X, a premium to the broader industry's average of 5.66X.

It also trades higher than other industry players like 10x Genomics (3.83X) and SOPHiA GENETICS (3.69X).

Image Source: Zacks Investment Research

Our Take

As the AI market is expected to expand rapidly in the coming years, Tempus is strategically positioned to seize emerging opportunities. Backed by a solid financial outlook and a focus on advancing healthcare outcomes, TEM offers investors an attractive prospect for high returns in the AI and healthcare spaces.

Despite the Zacks Rank #3 (Hold) company’s several recent upsides, its premium valuation and lack of near-term profitability are limiting its near-term gains. While current shareholders should hold their positions, new investors should wait for the stock to retract some of its recent gains, providing a better entry point. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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