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Tempus AI Stock Jumps Post Q2 as EBITDA Breakeven Nears: Buy or Hold?
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Key Takeaways
Tempus AI Q2 revenues surged 89.6% YoY, led by Genomics and Data and Services growth.
EBITDA loss narrowed to $5.6M from $31.2M, nearing breakeven for 2025.
$750M convertible note boosts liquidity for debt repayment and growth plans.
Tempus AI’s (TEM - Free Report) stock has surged nearly 13% since its second-quarter 2025 earnings release. The quarter saw strong top-line growth, operating leverage and strategic positioning in a high-value market. The company posted an 89.6% year-over-year revenue jump, driven by a significant surge in Genomics revenues from accelerating oncology and hereditary testing volumes, along with solid growth in its Data and Services segment, fueled by AI-driven data licensing.
Gross profit more than doubled, while adjusted EBITDA losses narrowed, bringing the company within reach of profitability. With raised full-year revenue guidance, strengthened liquidity through a $750 million convertible note offering and targeted advancements, Tempus AI is emerging as a prominent player in AI-enabled precision medicine, a profile currently in sharp focus among growth-oriented investors.
So far in August, shares of Tempus AI have surged 17.3% against a 3% decline of the Medical Info Systems industry. The Medical sector has risen 0.4% rise and the S&P 500 has improved 0.8% in the meantime. The company has also outperformed other players in the health infotech field, like iRhythm Technologies (IRTC - Free Report) and SOPHiA GENETICS (SOPH - Free Report) , which rose 15.8% and 0.4%, respectively, during the said period.
Month-To-Date Share Comparison
Image Source: Zacks Investment Research
Q2 Results Show Clear Path to Profitability
Tempus AI’s second-quarter 2025 results highlight a clear path to profitability, driven by strong revenue growth, margin expansion and disciplined cost control. Revenues rose 89.6% year over year, beating the Zacks Consensus Estimate by 5.12%, led by a 115% surge in Genomics from accelerating oncology and hereditary testing volumes and a 35.7% increase in high-margin Data and Services from AI-enabled data licensing. Gross profit jumped 158%, lifting adjusted gross margin to 62% despite a 32.2% rise in the cost of revenues (genomics, data and services).
Adjusted operating expenses fell 57.8%, narrowing adjusted EBITDA losses to $5.6 million from $31.2 million a year ago. This also marked an improvement from the first quarter’s $16 million loss and brought the company closer to breakeven. Management reaffirmed its $5 million adjusted EBITDA target for 2025, a $110 million improvement over 2024.
Tempus AI also has a strong cash position, holding $293 million at the end of the quarter, plus a $750 million convertible note issued after the quarter at a low 0.75% interest rate. This funding will help the company pay down debt and support future growth. With its high-margin revenues growing quickly, profits improving and tight cost control, Tempus AI is on track to reach sustainable profitability soon.
TEM Ahead of Moving Averages Too
Going by the technical indicators, the stock is trading above its 50-day and 200-day moving averages, indicating upward momentum and price stability.
TEM Above the 50 and 200-day SMA
Image Source: Zacks Investment Research
Is TEM Fairly Valued?
TEM stock is currently overvalued compared to its industry, as shown in the chart below.
The company is currently trading at a forward 12-month price-to-sales (P/S) ratio of 7.98, a premium to the broader industry's average of 5.57 and a little below the stock’s one-year median. The stock is also trading higher than other industry players like iRhythm (6.57X) and SOPHiA GENETICS (2.58X).
Image Source: Zacks Investment Research
Final Take
Despite Tempus AI’s stellar second-quarter 2025 performance, marked by strong revenue growth, narrowed loss, rapid margin expansion, disciplined cost control and a strong liquidity position, the stock’s current premium valuation suggests that much of this optimism may already be priced in. Additionally, the company remains in a net loss position, and its path to sustained profitability will depend on maintaining growth momentum through the upcoming quarters while keeping costs under control. With shares already trading at elevated levels, we advise those who already have this Zacks Rank #3 (Hold) stock in their portfolios to maintain their positions, while others may wait for a more favorable entry point. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Tempus AI Stock Jumps Post Q2 as EBITDA Breakeven Nears: Buy or Hold?
Key Takeaways
Tempus AI’s (TEM - Free Report) stock has surged nearly 13% since its second-quarter 2025 earnings release. The quarter saw strong top-line growth, operating leverage and strategic positioning in a high-value market. The company posted an 89.6% year-over-year revenue jump, driven by a significant surge in Genomics revenues from accelerating oncology and hereditary testing volumes, along with solid growth in its Data and Services segment, fueled by AI-driven data licensing.
Gross profit more than doubled, while adjusted EBITDA losses narrowed, bringing the company within reach of profitability. With raised full-year revenue guidance, strengthened liquidity through a $750 million convertible note offering and targeted advancements, Tempus AI is emerging as a prominent player in AI-enabled precision medicine, a profile currently in sharp focus among growth-oriented investors.
So far in August, shares of Tempus AI have surged 17.3% against a 3% decline of the Medical Info Systems industry. The Medical sector has risen 0.4% rise and the S&P 500 has improved 0.8% in the meantime. The company has also outperformed other players in the health infotech field, like iRhythm Technologies (IRTC - Free Report) and SOPHiA GENETICS (SOPH - Free Report) , which rose 15.8% and 0.4%, respectively, during the said period.
Month-To-Date Share Comparison
Image Source: Zacks Investment Research
Q2 Results Show Clear Path to Profitability
Tempus AI’s second-quarter 2025 results highlight a clear path to profitability, driven by strong revenue growth, margin expansion and disciplined cost control. Revenues rose 89.6% year over year, beating the Zacks Consensus Estimate by 5.12%, led by a 115% surge in Genomics from accelerating oncology and hereditary testing volumes and a 35.7% increase in high-margin Data and Services from AI-enabled data licensing. Gross profit jumped 158%, lifting adjusted gross margin to 62% despite a 32.2% rise in the cost of revenues (genomics, data and services).
Adjusted operating expenses fell 57.8%, narrowing adjusted EBITDA losses to $5.6 million from $31.2 million a year ago. This also marked an improvement from the first quarter’s $16 million loss and brought the company closer to breakeven. Management reaffirmed its $5 million adjusted EBITDA target for 2025, a $110 million improvement over 2024.
Tempus AI also has a strong cash position, holding $293 million at the end of the quarter, plus a $750 million convertible note issued after the quarter at a low 0.75% interest rate. This funding will help the company pay down debt and support future growth. With its high-margin revenues growing quickly, profits improving and tight cost control, Tempus AI is on track to reach sustainable profitability soon.
TEM Ahead of Moving Averages Too
Going by the technical indicators, the stock is trading above its 50-day and 200-day moving averages, indicating upward momentum and price stability.
TEM Above the 50 and 200-day SMA
Image Source: Zacks Investment Research
Is TEM Fairly Valued?
TEM stock is currently overvalued compared to its industry, as shown in the chart below.
The company is currently trading at a forward 12-month price-to-sales (P/S) ratio of 7.98, a premium to the broader industry's average of 5.57 and a little below the stock’s one-year median. The stock is also trading higher than other industry players like iRhythm (6.57X) and SOPHiA GENETICS (2.58X).
Image Source: Zacks Investment Research
Final Take
Despite Tempus AI’s stellar second-quarter 2025 performance, marked by strong revenue growth, narrowed loss, rapid margin expansion, disciplined cost control and a strong liquidity position, the stock’s current premium valuation suggests that much of this optimism may already be priced in. Additionally, the company remains in a net loss position, and its path to sustained profitability will depend on maintaining growth momentum through the upcoming quarters while keeping costs under control. With shares already trading at elevated levels, we advise those who already have this Zacks Rank #3 (Hold) stock in their portfolios to maintain their positions, while others may wait for a more favorable entry point. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.