What's Fueling Tempus AI's Explosive Sales Growth?

Chicago-based Tempus AI, Inc. TEM is experiencing robust revenue growth, marked by record-setting financial performance. In the first quarter of 2025, the company reported a 75.4% year-over-year increase in total revenues, driven by 89% growth in Genomics revenues and a 43% rise in Data & Services revenues. 

The Genomics business benefited from 20% volume growth in oncology tests (legacy Tempus clinical testing) and higher average revenue per test, driven by increased Medicare reimbursement rates. Additionally, hereditary testing contributed $63.5 million in Genomics revenues on 23% volume growth from the February acquisition of Ambry Genetics. The Data & Services segment’s growth was driven by a 58% improvement in Insights, the company’s data licensing business. This business has scaled significantly by signing deals with companies like Novartis, Merck EMD, Takeda and United Therapeutics last year. 

TEM made several recent developments that are setting the stage for sales growth. In line with this, Tempus AI signed a $200 million data and modeling license agreement with AstraZeneca AZN and Pathos to build the world’s largest foundation model. Additionally, the company’s new liquid biopsy assay, xM for treatment response monitoring (TRM), is scheduled for clinical launch in the coming months. Furthermore, the company’s first whole-genome sequencing (WGS) test, Xh, is slated for clinical launch by next year. 

Sales Growth of TEM’s Competitors

Exact Sciences Corporation EXAS posted a 10.9% revenue rise in the first quarter of 2025, led by strong growth in its Screening segment, driven by strong adoption of Cologuard (a non-invasive, patient-friendly, stool-based DNA screening test) and the launch of Cologuard Plus. Precision Oncology revenues grew 4% due to continued adoption of Oncotype DX (cancer diagnostic tests and services) and the launch of Oncodetect, a molecular residual disease test. Adjusted EBITDA rose 61% to $63 million, supported by volume leverage and operational efficiency.

Exelixis EXEL reported strong revenue growth in the first quarter of 2025, with total revenues increasing 30.6% year over year. The performance was largely driven by the ongoing success of the Cabozantinib franchise, particularly the recent U.S. launch of CABOMETYX for the treatment of advanced neuroendocrine tumors. 

TEM’s Price Performance and Valuation

In the past year, Tempus AI shares have surged 79.1%, outperforming the industry’s 39.9% growth and the S&P 500 composite’s 13% improvement. 

TEM currently trades at a forward 12-month Price-to-Sales (P/S) of 7.85X compared to the industry average of 5.91X. 

TEM Stock Estimate Trend

Earnings estimates for Tempus AI in 2025 and 2026 are showing a mixed picture. 

TEM stock currently carries a Zacks Rank #4 (Sell). 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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