Should You Buy, Hold or Sell Tempus AI Stock Pre-Q4 Earnings Release?

Core Insights - Tempus AI (TEM) is set to release its fourth-quarter 2025 results on February 24, 2026, after market close, with expectations of strengthened performance in 2026 due to strategic collaborations and product innovations [1] Financial Performance - Preliminary results indicate that revenues for the full year 2025 reached approximately $1.27 billion, marking an 83% year-over-year increase, with about 30% of this growth being organic [2] - Diagnostics revenues totaled around $955 million, reflecting a 111% year-over-year increase, driven by a 26% growth in oncology volume and a 29% increase in hereditary testing volume [3] - Data and applications revenues reached approximately $316 million, showing a 31% year-over-year growth, partly due to a 38% improvement in the Insights (data licensing) business [3][4] - The company achieved a Total Contract Value (TCV) of over $1.1 billion as of December 31, 2025, and reported positive adjusted EBITDA of $1.5 million in Q3 2025, a year-over-year improvement of $23.3 million [12] Strategic Collaborations - Tempus has entered a multi-year collaboration with Whitehawk Therapeutics, leveraging its proprietary dataset to enhance oncology research and clinical trial design [7][8] - The company initiated a research study with the Institute for Follicular Lymphoma Innovation, marking its first collaboration with a nonprofit to create a robust dataset for follicular lymphoma [11] Market Position and Challenges - Despite significant revenue growth, Tempus' stock price has declined by 32.9% in Q4, reflecting a broader negative sentiment in the AI medtech sector [6] - The stock currently trades at a price-to-book (P/B) ratio of 17.79X, which is above the industry average of 8.76X, raising valuation concerns [10][20] - The company continues to face challenges with GAAP losses due to stock-based compensation and amortization of acquired intangibles, limiting visibility into sustainable profitability [17][18] Future Outlook - The company is positioned as a high-growth leader at the intersection of AI and precision medicine, with strong operational momentum expected to continue into 2026 [21] - Investors are advised to maintain their positions in Tempus stock, which is currently rated as a Zacks Rank 4 (Sell) [22]