Is Tempus AI Stock a Buy Now or a Hold After a Big 2025 Run?

Core Insights - Tempus AI has experienced a significant rally in 2025, with expectations now focused on execution against various clinical, regulatory, and commercial milestones [1] Stock Performance - Tempus AI is currently trading around $77, with a 6-12 month price target of $82, indicating modest upside potential from current levels [2] - The stock has increased approximately 128% year-to-date, reflecting a rapid shift in sentiment towards AI in healthcare [2] - The stock has a beta of roughly 5, indicating high volatility, where gains and reversals can occur quickly [2] Ranking and Valuation - Tempus AI holds a Zacks Rank 3 (Hold) with a VGM score of F, and component scores of Value F, Growth C, and Momentum F, suggesting a balanced risk-reward profile [3] - The stock screens at about 12.2x trailing twelve-month sales, which is considered premium, but growth-adjusted metrics indicate a robust top-line trajectory [7] Financial Performance - The company has achieved non-GAAP profitability and positive EPS surprises, indicating improved operating leverage as volumes scale [4] - However, GAAP metrics still show persistent losses due to ongoing investments and accounting items that have not normalized [5] Catalysts for Growth - Key near-term catalysts include management's focus on ADLT migrations, FDA submissions for xT and xR, and progress on MRD reimbursement, which could enhance clinical adoption and payer confidence [6][9] - The expansion of enterprise data agreements is also expected to improve revenue visibility and unit economics [6] Market Context - Pricing for Tempus AI's offerings still lags behind peers in some areas, and the report notes that bookings may take years to convert into recognized revenue [10] - Regulatory timelines, particularly around FDA reviews and coverage determinations, may introduce volatility into quarterly results [10] Strategic Considerations - A balanced investment approach is recommended, with clearly defined catalysts and risk controls while the company executes on its strategic initiatives [12]