Although buying the dip is never a sure bet, iconic investor Cathie Wood believes loading up on shares of beaten-down Tempus AI (TEM) now is a great move. Yet to be profitable, Tempus has notable backers in the form of the Masayoshi Son-led Softbank (SFTBY) and Norges Bank, the Central Bank of Norway.
About Tempus AI Stock
Founded in 2015, Tempus AI (TEM) leverages artificial intelligence (AI) to analyze clinical and molecular data, aiming to provide personalized treatment options across various medical fields, including oncology and cardiology.
Valued at a market capitalization of about $9.6 billion, TEM stock has had a tremendous start to 2025, rallying 62% on a year-to-date basis.
However, the stock’s recent downturn was seen as an opportunity by Cathie Wood to load up on the company’s stock. Through her flagship Ark Innovation ETF (ARKK) and the ARK Genomic Revolution ETF (ARKG), Wood purchased $24.8 million in Tempus shares between Feb. 25 and Feb. 28. Wood’s holdings of the stock are now valued at a total of $438.2 million.
So, what makes Wood one of the largest backers of the company? Let’s have a closer look.
Not-So-Weak Q4
The most recent dip in the company’s stock has been attributed to its Q4 earnings, wherein Tempus missed both revenue and earnings estimates. However, the report did reveal some positives.
Revenues grew by 35.8% from the previous year to $200.7 million with its core segment of genomics witnessing a yearly rise to $120.4 million. The company grew its network to about 3,000 providers in the United States. Meanwhile, adjusted losses narrowed to $0.18 per share from $1.58 per share in the prior year.
Additionally, the data and services segment saw impressive performance in the fourth quarter, generating $80.2 million in revenue, marking a robust 44.6% year-over-year increase.
Notably, the company recorded an approximate 140% net revenue retention rate in 2024, underscoring the substantial value that existing customers derive from Tempus AI’s offerings. This high retention rate signals strong customer satisfaction and an increasing willingness among clients to expand their spending on the company’s solutions.
Looking ahead, Tempus AI has revised its 2025 revenue projection to approximately $1.24 billion, representing 79% year-over-year growth. This updated forecast slightly exceeds the earlier estimate of around $1.23 billion, which was disclosed when the company provided its preliminary results in mid-January. The upward revision reinforces the company’s growth trajectory and its ability to capitalize on expanding market demand.
Moreover, along with rising revenue and narrowing losses, Tempus’ net cash outflow from operating activities also decreased to $189.05 million in 2024 from an outflow of $214.3 million reported in 2023, indicating improvement in cash flow management from its operations.
Overall, Tempus closed 2024 with a cash balance of $340.9 million which was much more than its net long-term debt levels of $267.2 million and no short-term debt on its books.
Major Drivers
With improving financials, it’s easy to see why a growth-focused investor like Cathie Wood is highly optimistic about Tempus AI. The real appeal lies in its long-term potential, and recent developments indicate that the company is making significant strides in that direction.
As a dominant force in AI-integrated healthcare, Tempus is concentrating on expanding its revenue streams and accelerating customer adoption. The company’s proprietary data model is designed to refine personalized treatment plans, reinforcing its position at the intersection of AI and medicine.
A standout innovation is Tempus One, the company’s proprietary large language model agent. This AI-powered medical assistant is engineered to aid physicians and researchers in clinical decision-making and therapeutic development. Recently, Tempus enhanced its capabilities, enabling the system to analyze vast amounts of unstructured documents for research and patient care. The updated model offers tools that can be deployed in various critical areas. One such function is patient identification for clinical trial enrollment. By analyzing unstructured data — ranging from pathology reports to imaging scans — Tempus One determines trial eligibility and proactively alerts researchers after identifying potential matches.
Tempus has also strengthened its foothold in genetic testing through the acquisition of Ambry Genetics, a firm specializing in cancer and rare disease diagnostics. The $600 million deal is a strategic move aimed at integrating genetic data — including hereditary disease screening — into Tempus’ AI-driven diagnostics framework, thereby enhancing its capabilities in precision medicine.
A pivotal application of Tempus’ technology lies in the field of hematologic oncology. The company is leveraging AI to revolutionize precision medicine for blood cancers, aiming to extract deeper genetic insights beyond traditional gene and mutation analysis. This initiative has culminated in the introduction of xH, a groundbreaking whole-genome sequencing (WGS) test set to redefine genomic analysis and its role in personalized treatments.
Meanwhile, the company’s mobile application, Olivia, has now been launched on both Android and iOS. Functioning as an AI-driven health assistant, Olivia analyzes patient data to generate tailored insights, effectively optimizing real-time diagnostics and treatment strategies.
These strategic initiatives underscore Tempus AI’s commitment to transforming the healthcare landscape through advanced AI applications, positioning the company as a formidable player in the evolving world of precision medicine.
Analyst Opinions on TEM Stock
Overall, analysts continue to remain cautiously optimistic on Tempus stock with a consensus rating of "Moderate Buy” and a mean target price of $62.70. This indicates upside potential of about 18% from current levels. Out of 11 analysts covering TEM stock, three have a “Strong Buy” rating, two have a “Moderate Buy” rating, and six have a “Hold” rating.
