What does Tempus AI actually do?

Tempus AI combines genomic sequencing, clinical data, and AI models to support precision medicine decisions in oncology and other disease areas. It earns revenue from two segments: diagnostics (performing genomic tests) and Data & Applications (licensing de-identified data and AI tools to pharma and research institutions).

How did Tempus AI perform in Q1 2026?

Q1 2026 revenue was $348.1 million, up 36.1% year-over-year. Adjusted EBITDA loss narrowed to just $2.8 million. EPS came in at -$0.13, beating consensus estimates of -$0.19. Gross margin improved to 63.8%.

What is Tempus AI's 2026 guidance?

The company guided for full-year 2026 revenue of $1.59–$1.60 billion, representing approximately 25% growth. Adjusted EBITDA is expected to reach roughly $65 million for the full year—the company's first annual adjusted EBITDA profit.

Is Tempus AI profitable?

Not yet on a GAAP basis. The 2025 net loss was $245 million, though much of that was non-cash stock compensation. However, Q4 2025 marked the first quarter of positive adjusted EBITDA ($12.9 million), and the 2026 guidance calls for $65 million in adjusted EBITDA—a meaningful inflection.

Who are Tempus AI's main competitors?

In genomic diagnostics: Foundation Medicine (Roche), Guardant Health, Exact Sciences, and Veracyte. In oncology data and AI platforms: Flatiron Health (Roche), ConcertAI, and SOPHiA GENETICS. Tempus's edge is integrating both layers into one flywheel.

What is the Merck deal about?

In March 2026, Tempus announced a multi-year strategic collaboration with Merck. Merck will use Tempus's de-identified patient data and the Lens AI platform for oncology biomarker discovery. It deepens Tempus's pharmaceutical data lock-in strategy.

What are the biggest risks for TEM investors?

Key risks include: continued GAAP losses from stock compensation, Medicare/Medicaid reimbursement policy changes for genomic tests, potential data partner diversification by large pharma, and tightening genomic data privacy regulations.

What is TEM's valuation like?

At roughly $54 per share (early June 2026), TEM trades at approximately 5.3x 2026 revenue guidance, which is below typical high-growth healthcare SaaS multiples of 6–12x. The consensus analyst price target is around $67, implying about 26% upside.

What US tax considerations apply to TEM investors?

Long-term capital gains (held >1 year) on TEM are taxed at 0%, 15%, or 20% depending on income. Short-term gains are taxed as ordinary income. TEM pays no dividend, so there is no dividend tax concern. Consult a tax advisor for your situation.

TEM Tempus AI Stock Outlook 2026: Precision Oncology's AI...

The Oncology Data Flywheel Nobody Else Has Built

Most healthcare AI companies promise to transform medicine. Tempus AI (Nasdaq: TEM) has actually built the dataset to make that promise credible. Since 2015, the company has assembled what it describes as one of the world’s largest linked clinical-genomic databases in oncology, now licensing that infrastructure to the pharmaceutical industry at scale.

The Q1 2026 earnings call confirmed the model is working. Revenue hit $348.1 million, up 36% year-over-year, with both business segments accelerating. More importantly, adjusted EBITDA loss collapsed to just $2.8 million — a whisker away from break-even. For a company that was burning cash at a much heavier rate two years ago, this is a genuine inflection.

The investment question for 2026 is not whether Tempus’s market is real — it clearly is. The question is whether the stock, priced at roughly 5x forward revenue, already discounts this trajectory or still offers a meaningful margin of safety.

One context point before diving in: TEM is a high-conviction, high-risk holding. The company has nearly $644 million in cash and marketable securities at last report, so liquidity is not the concern. The concern is whether the GAAP losses — $125.9 million in Q1 2026 alone — reflect sustainable capital allocation or a company still figuring out its cost structure. That question shapes everything below.

Two Revenue Engines, One Data Asset

Tempus runs two businesses off the same underlying genomic dataset.

Diagnostics: Labs receive tumor samples from oncologists, perform next-generation sequencing (NGS) and other molecular assays, and return actionable reports. Reimbursement comes from Medicare, Medicaid, and private insurers. Q1 2026 diagnostics revenue grew 34.7% year-over-year, driven by volume growth and a richer mix of tests.

Data & Applications: The higher-margin engine. Tempus licenses de-identified patient data, AI analytical tools (including the Lens platform), and computational workspaces to biopharma companies and research institutions. Q1 2026 this segment grew 40.5% — faster than diagnostics — which is exactly what investors want to see as it implies improving overall economics.

The Merck collaboration signed in March 2026 is the clearest external validation of this model. Merck — one of the largest oncology-focused pharma companies in the world — will rely on Tempus data and AI infrastructure for biomarker discovery across its pipeline. When a company of Merck’s analytical sophistication chooses to depend on your data platform rather than build its own, that is a defensible moat signal.

Verified Financials at a Glance

Metric	Figure	Source
Q1 2026 Revenue	$348.1M (+36.1% YoY)	SEC 8-K, May 2026
Q1 2026 Adjusted EBITDA	-$2.8M (major improvement)	SEC 8-K, May 2026
Q1 2026 Gross Margin	63.8%	SEC 8-K, May 2026
Q1 2026 EPS	-$0.13 (beat -$0.19 estimate)	SEC 8-K, May 2026
FY2025 Revenue	~$1.3B (+83.4% YoY)	10-K, Feb 2026
FY2025 Net Loss	$245M	10-K, Feb 2026
Q4 2025 Adj. EBITDA	+$12.9M (first profitable quarter)	10-K, Feb 2026
Cash & Securities (Q1 end)	$643.8M	SEC 8-K, May 2026
FY2026 Revenue Guidance	$1.59–$1.60B (~25% growth)	8-K, May 2026
FY2026 Adj. EBITDA Guidance	~$65M	8-K, May 2026

One number to highlight: $643.8 million in cash and marketable securities at quarter-end. Tempus is not burning cash at a rate that raises near-term survival questions — it has roughly three years of runway at current operating cash usage.

The 2025 full-year picture is also worth anchoring: revenue of approximately $1.3 billion was up 83.4% from 2024. That growth rate will slow — the 2026 guidance calls for ~25% — but a company posting $1.6 billion in revenue at 25% annual growth with improving margins and approaching breakeven is a very different animal from the early-stage startup it was at IPO.

Competitive Landscape: Where Tempus Has an Edge

Precision oncology diagnostics and data is a field with well-resourced incumbents. Understanding where Tempus wins and where it could lose is essential.

The diagnostic layer is dominated by Foundation Medicine (wholly owned by Roche), which has deep hospital relationships and multiple FDA companion diagnostic approvals. Guardant Health leads in liquid biopsy, which has distinct clinical advantages for monitoring disease after treatment. Veracyte holds strong positions in specific cancer types like thyroid and lung.

Tempus competes in genomic profiling but deliberately does not position itself as a head-to-head NGS-only play. Its differentiation is the integrated loop: test results feed the data platform; the platform’s AI insights make tests more clinically actionable; better actionability drives test volume. No other company runs this full cycle at Tempus’s scale.

The data platform layer is where Tempus’s real long-term moat sits. Flatiron Health (also Roche) dominates oncology real-world evidence from EHR data, and ConcertAI competes in the pharma analytics space. But Tempus uniquely anchors its dataset to actual genomic sequencing results, not just administrative records — a richer signal for drug development.

The April 2026 collaboration with Predicta Biosciences to expand into ultra-sensitive whole-genome sequencing for hematologic malignancies and MRD monitoring is evidence that Tempus is actively extending its diagnostic scope. Blood cancers represent a significant new addressable market, and being early in this transition matters for long-term data accumulation.

Compare this to Palantir (PLTR): Palantir sells a general-purpose AI data integration platform, largely to government and enterprise. Tempus is the Palantir of oncology, but with a proprietary, continuously replenished biological dataset that competitors cannot simply purchase. The barrier is not technology; it is ten years of curated clinical relationships and sample collection.

What “Multimodal Data” Actually Means for Drug Discovery

One of the subtler reasons Tempus is valuable to pharmaceutical partners — and why the Merck deal is strategically significant — is the concept of multimodal data linkage. Most genomic databases contain sequencing results. Tempus links those results to clinical outcomes: what happened to the patient after treatment, how long they survived, whether the tumor recurred.

This linkage is enormously valuable for biomarker discovery. A drug company wants to know not just which patients have a particular genetic variant, but which patients with that variant responded well to a particular therapy. Without clinical outcome data linked to the genomic data, you can identify patients but cannot learn from them.

Building this linkage requires years of follow-up and deep hospital relationships. It is not something that can be purchased or built overnight — which is precisely why Foundation Medicine, Flatiron Health, and Tempus represent three structurally different datasets rather than interchangeable commodities.

Tempus’s AI platform (Lens) then provides pharmaceutical researchers direct access to this environment through a cloud workspace. Instead of requesting data extracts and waiting weeks, researchers can query and analyze in something approaching real-time. The business model resembles a pharma-grade Snowflake — a data cloud for oncology — more than it resembles a laboratory services company.

Growth Trajectory: From 83% to 25% — Is the Deceleration Concerning?

Some investors flag the deceleration from 83.4% growth in 2025 to approximately 25% guided for 2026 as a red flag. I think this misreads the situation.

The 2025 growth reflected two factors: organic market expansion and the effect of integrating acquired or newly scaled capabilities. A business generating $1.3 billion in revenue simply cannot sustain 80%+ growth rates — the law of large numbers is unavoidable. What matters is whether 25% growth at $1.6 billion in revenue is high-quality growth, meaning it comes with expanding margins and approaching profitability.

On that score, the Q1 2026 data point is encouraging. The adjusted EBITDA loss of $2.8 million at $348 million quarterly revenue represents an adjusted EBITDA margin of essentially -0.8%. A year earlier, the margin was significantly more negative. The trajectory — not the absolute number — is what warrants attention. If Q2 and Q3 of 2026 continue this improvement curve, annual adjusted EBITDA of $65 million becomes not just achievable but potentially conservative.

Three Scenarios for TEM in 2026

Bull case: Data & Applications sustains 40%+ growth, additional large pharma partnerships are announced in H2 2026, and adjusted EBITDA lands well above $65 million guidance. The narrative shifts from “pre-profitability growth story” to “healthcare AI compounder.” P/S multiple re-rates toward 8x forward revenue, implying a stock price above $80.

Base case: The company hits its revenue and adjusted EBITDA guidance cleanly. Gross margin continues to expand. The stock grinds toward the analyst consensus target of ~$67, driven by steady execution rather than a catalyst-driven re-rating. GAAP profitability remains a 2027–2028 story.

Bear case: Medicare or Medicaid changes reimbursement rules for broad-panel genomic tests, slowing diagnostics volume growth. A large pharma partner (Merck or another) reduces data spending or brings sequencing in-house. Stock-based compensation stays elevated, increasing shareholder dilution. TEM retraces toward the low $40s.

The honest answer is that the bear case requires specific external shocks, not just execution shortfalls. Management’s track record of beating adjusted EBITDA estimates creates some credibility on the base case.

Valuation: Is 5x Revenue Cheap?

At approximately $54 per share and $8.4 billion market cap, TEM trades at roughly 5.3x its 2026 revenue guidance. For context:

High-growth healthcare SaaS companies with similar revenue growth rates and improving margins often trade at 6–12x forward revenue.
The discount reflects TEM’s ongoing GAAP losses and the market’s uncertainty about when stock-based compensation normalizes.

If Tempus delivers $65 million in adjusted EBITDA for 2026, the EV/adjusted EBITDA multiple would be roughly 120x — expensive in absolute terms, but this will compress rapidly if EBITDA scales as projected into 2027.

The more useful framework is to think about what revenue multiple is appropriate once Tempus is generating, say, $300+ million in adjusted EBITDA in 2028 (assuming continued 20–25% revenue growth from the 2026 base). At that point, a 15–20x EV/EBITDA multiple on a large number could imply significant upside from today’s price.

Intuitive Surgical (ISRG) offers an instructive analogy: once a healthcare platform becomes deeply embedded in clinical workflows and consistently profitable, the market tends to award it a premium multiple for the long term. Tempus is attempting to build a similar embedded position in oncology data infrastructure.

Key Risks to Monitor

Reimbursement risk is the most underappreciated. A significant portion of Tempus’s diagnostic volume depends on payers — especially Medicare — agreeing to reimburse broad genomic panels. CMS (Centers for Medicare & Medicaid Services) has historically been slow to expand coverage and has occasionally tightened criteria. Any adverse change hits diagnostics revenue directly. This is not a remote theoretical risk; it has happened to peers in the molecular diagnostics space before, and Tempus is not immune.

Valuation compression in a rising rate environment: TEM is priced on long-duration cash flows. If interest rates stay elevated longer than expected, the discount rate applied to those future cash flows rises, compressing multiples. This affects all high-growth, pre-GAAP-profitability names and is a macro risk rather than a company-specific one.

Stock-based compensation is genuine shareholder dilution, not just an accounting adjustment. Q1 2026 alone saw $56.3 million in SBC. Until this normalizes as a share of revenue, GAAP profitability will remain distant.

Data privacy regulations are tightening across jurisdictions. Tempus’s entire data licensing model depends on robust de-identification processes. A regulatory challenge or a breach that undermines trust in those processes could be disruptive.

Competitive data accumulation: As Foundation Medicine and Guardant Health expand their testing volumes, they also build large genomic datasets. If either decided to build a pharma-facing data licensing business aggressively, competition in the Data & Applications segment could intensify.

My Take

TEM is a compelling story with a genuine data moat — but “compelling story” and “attractive stock today” are not the same thing.

The adjusted EBITDA inflection is real. Q4 2025 delivered the first positive quarter, and the full-year 2026 guidance of $65 million is credible given Q1’s trajectory. The Merck partnership validates the platform. Revenue growth at 25–36% is exceptional for a company approaching $1.6 billion in annual revenue.

What gives me pause is the GAAP picture: $125.9 million net loss in a single quarter, driven partly by stock compensation that dilutes existing shareholders in real economic terms. Until SBC normalizes and GAAP profits arrive, investors are effectively paying a premium on faith that the adjustment items will decline.

My position: accumulate on weakness below $50, hold if already invested, and avoid chasing above $65 until at least one more quarter confirms the adjusted EBITDA trajectory. Set a Q2 2026 earnings call (expected August 2026) as the next major decision point — if Data & Applications growth accelerates above 45% and adjusted EBITDA exceeds $20 million for the quarter, the bull case becomes considerably more actionable.

For US tax purposes: TEM qualifies for long-term capital gains treatment (0%, 15%, or 20% depending on taxable income) if held longer than one year. Given this is fundamentally a multi-year thesis, most investors with conviction should be structuring this as a long-term position regardless.

A final note on position sizing: TEM is not a “set it and forget it” holding. The reimbursement and regulatory risks require active monitoring. Build a position you can add to on weakness, and size it so that a 40% drawdown — possible in a bad outcome scenario — does not impair your overall portfolio significantly.

This post is for informational purposes only and is not investment advice. All investment decisions are the sole responsibility of the reader.

Sources and data used: Tempus AI Q1 2026 Earnings (SEC 8-K, May 2026); Tempus AI FY2025 Annual Report (10-K filed February 24, 2026); Seeking Alpha, MarketBeat, StockTitan Q1 2026 earnings coverage (May 2026); stockanalysis.com analyst consensus data (early June 2026). Stock price approximately $54 as of early June 2026; subject to change.