Tempus AI Stock Sees 21% Gain in 3 Days: Is it a Buy After AZN Deal?

Tempus AI TEM has skyrocketed 21% in the last three days, fueled by news of a $200 million partnership with AstraZeneca AZN and Pathos AI. The multi-year deal focuses on building a multimodal AI-driven foundation model for oncology, using TempusAI’s de-identified oncology data. This partnership is a big win, matching Tempus AI’s fourth-quarter 2024 revenues alone.

But with the stock on fire, the big question is, will the rally continue, or is Tempus AI already priced for perfection? Let’s take a closer look.

Favorable Price Comparison

In the last three days, the stock has outperformed the 2.3% growth of the Medical Info Systems industry, the Medical sector’s 2% increase and the benchmark S&P 500’s 2.5% rise. The company has also outperformed other players in the health infotech field like iRhythm Technologies IRTC and SOPHiA GENETICS SOPH, which have risen 4.1% and 10.1%, respectively, during the same period.

3-Day Share Comparison

TEM-AZN-Pathos AI Deal to Build Foundation for Long-term Stability

Tempus AI’s newly unveiled $200 million multi-year collaboration with AstraZeneca and Pathos AI includes both data licensing and model development fees. The agreement taps into Tempus AI’s de-identified oncology dataset to build a multimodal foundation model for cancer research. Importantly, the resulting model will be shared among all three partners, enabling each to advance their R&D pipelines while contributing to improving patient outcomes.

This partnership not only highlights the value of TEM’s  AI and data assets but also deepens its existing relationship with AstraZeneca. With the deal value alone matching Tempus AI’s fourth-quarter 2024 revenues, it’s a major milestone that could lead to more licensing opportunities and position Tempus as a key player in AI-driven precision medicine.

Recent Acquisitions and Innovations Hold Significant Long-Term Potential

The year 2025 has been great for Tempus AI, with the stock escalating nearly 47%. This has been largely fueled by the company’s acquisition of Deep 6 AI, an AI company specializing in clinical trial matching. With this, Tempus can accelerate drug development timelines and attract more pharmaceutical and biotech partnerships. (Read more: Tempus AI vs. Doximity: Which AI in Healthcare Stock is a Better Buy?)

In addition, the February 2025 acquisition of Ambry Genetics further expanded its genomics capabilities with a West Coast lab and enhanced inherited risk testing. Additionally, a five-year extension with Google ensures cost-efficient cloud infrastructure, which is vital for Tempus AI’s AI-powered solutions. These strategic moves position Tempus AI for long-term growth, potentially boosting the stock as AI-driven healthcare continues to gain traction.

Not only this, the launch of the xT CDx in vitro diagnostic device and the Olivia health concierge app adds to its growing portfolio of digital and molecular diagnostic tools.

Another major tailwind is CMS reimbursement approval for Tempus’ ECG-AF algorithm—an endorsement that could catalyze adoption across U.S. health systems.

Is Its Valuation Justified?

At a forward price-to-sales (P/S) ratio of 6.4, Tempus trades at a premium to peers like iRhythm (4.58x) and SOPHiA GENETICS (2.55x). However, it's still below its one-year median of 8.31x, suggesting room for cautious optimism.

However, EPS revisions have trended downward from a projected loss of 47 cents to a loss of 58 cents per share for 2025 over the past couple of months.

Rising operating costs and a modest EBITDA outlook ($5 million now compared to the earlier-anticipated $6 million) may have weighed on short-term earnings sentiment.

Should You Buy, Sell, or Hold TEM Stock?

For a long-term investor, the AstraZeneca deal could be one of many efforts positioning Tempus AI as a foundational data and AI player in oncology. With other strategic alliances, key acquisitions and the CMS decision supporting reimbursement for its ECG-AF algorithm, Tempus AI is well-positioned to expand its presence in AI-driven healthcare diagnostics. Yet, a conservative EBITDA outlook reflects the company’s rising operational costs and strong focus on long-term investments rather than short-term profitability.

Moreover, Tempus AI is yet to report positive earnings. Its expensive valuation also limits the near-term gains of this Zacks Rank #3 (Hold) stock. 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 Rank #1 (Strong Buy) stocks here.

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

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