Tempus AI is scaling quickly across diagnostics and data licensing, with Q2 revenue up 22% and management lifting 2026 guidance. The stock still looks like a Hold as execution and cash generation need to catch up with a premium valuation.
Tempus AI (TEM) is a high-growth precision-medicine platform with a credible path toward stronger margins, but the stock already prices in substantial execution. Q2 2026 revenue reached $382.5M, up 22% year over year, while Data & Applications revenue grew 28% to $93.2M and Diagnostics revenue rose 20% to $289.3M. The quarter also produced $5.6M of net income and $8.0M of adjusted EBITDA.
The growth engine is real. Oncology volume increased 31% in Q2 2026, MRD volume reached 9,000 tests from 6,500 in Q1, and Tempus signed approximately $200M of new Data and Applications licenses. Management raised 2026 revenue guidance to $1.595B-$1.605B and expects approximately $65M of adjusted EBITDA.
The balance sheet and valuation temper the enthusiasm. At June 30, 2026, Tempus had $599.6M of cash against $1.37B of debt. Trailing EPS was -$1.44, free cash flow was -$190.8M, and enterprise value to revenue was 10.1x. The result is a Hold for a moderate-risk investor: a strong operating story, but one that requires continued growth, improving cash generation, and successful integration of new assets before the valuation becomes easier to defend.
Tempus AI is a Chicago-based healthcare technology company founded in 2015 and listed on Nasdaq after its June 2024 IPO. The company employs approximately 3,800 people and operates across diagnostics, clinical software, data licensing, and AI-enabled life-sciences applications.
Its model links two businesses. Diagnostics generates clinical, molecular, and imaging data through oncology, hereditary, pathology, pharmacogenomic, and MRD testing. Data & Applications monetizes linked, de-identified information through products such as Insights, Lens, Trials, Next, and Algos. The intended flywheel is straightforward: more testing creates more data, more data improves analytics and models, and better tools support additional testing and licensing.
Tempus reported $1.27B of revenue in 2025, compared with $693.4M in 2024 and $531.8M in 2023. Trailing revenue in the valuation data was $1.43B, reflecting the benefit of the company's 2026 growth. Its market capitalization was approximately $13.8B.
Diagnostics remains the larger operating segment. Q2 2026 Diagnostics revenue was $289.3M, up 20% year over year, with gross profit of $181.1M and a 62.6% gross margin. Oncology volume increased to approximately 96,500 tests from 73,500 a year earlier, a 31% increase.
The diagnostic portfolio spans solid-tumor profiling, liquid biopsy, hereditary testing, MRD, PCR profiling, and anatomic and molecular pathology. Oncology is the central growth driver, while hereditary testing is recovering from a difficult comparison period. Management expects hereditary growth to return to the mid-teens in the second half of 2026.
Data & Applications is smaller but growing faster. Q2 revenue was $93.2M, up 28% year over year, while Insights revenue grew 36%. In Q1 2026, management reported $87M of Data & Applications revenue, up 40.5%, with Insights growth above 44%. The quarter also produced approximately $200M in new licenses, strengthening visibility into future revenue.
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Tempus' flagship platform combines clinical testing with physician workflow and data products. Hub connects clinicians with diagnostic capabilities, while Insights provides linked, de-identified clinical, molecular, and imaging data to life-sciences customers. Lens, Trials, Next, and Algos extend the platform into research, clinical-trial matching, AI, and algorithmic diagnostics.
The latest product developments expand both pricing power and clinical reach. Tempus reported FDA approval for tumor-only xT, a clinical launch of xH for hematologic malignancies, the launch of Rare Whole Genome, and Tempus Preview, which surfaces key mutation predictions within approximately 24 hours of tissue receipt.
MRD is an important emerging product. Volume reached 9,000 tests in Q2 2026 from 6,500 in Q1, a 38% sequential increase. Management said roughly 10% of the sales force currently sells MRD, leaving a substantial commercial rollout ahead. Personalis adds another MRD capability, although the transaction also adds integration and capital-allocation demands.
Tempus' strongest strategic asset is the combination of data scale and workflow integration. Management reported a database exceeding 500 petabytes and said customers are using the platform to build proprietary models for internal research and development. The company also delivered its first oncology foundation model to AstraZeneca during Q2 2026.
Customer depth is another advantage. Tempus added Merck to its strategic collaboration base, expanded its relationship with Gilead, and cited large collaborations with AstraZeneca, GSK, and Bristol Myers Squibb. Management said it has almost half a dozen customers with large, multiyear strategic agreements.
The platform also has a practical workflow moat. Tempus reported an approximately 40% attach rate for algorithms on solid-tumor oncology assays. Its tools include homologous recombination deficiency, tumor origin, and immune profile algorithms. Embedded software can make a diagnostic platform harder to replace than a standalone test, although the moat still depends on clinical adoption, data quality, regulatory compliance, and customer renewals.
Tempus operates a laboratory and software platform rather than a traditional instrument manufacturer. Its operating chain includes sample collection, sequencing and pathology, clinical reporting, data linkage, software delivery, and commercial licensing. That structure gives the company multiple revenue paths but also creates regulatory, reimbursement, laboratory-capacity, and data-security requirements.
Cash conversion has been uneven. Operating cash flow was -$218.1M and free cash flow was -$245.4M in 2025. Quarterly free cash flow improved from -$83.3M in Q1 2026 to -$18.6M in Q2, while operating cash flow improved from -$73.3M to -$7.5M.
Management attributed the Q1 cash pressure to the timing of payables, bonuses, prepayments, and deferred revenue. That explanation fits the Q2 improvement, but the annual cash-flow record remains negative through 2025. The planned Personalis acquisition and the 0.0% convertible senior notes offering of $460M add further complexity to the operating structure.
The broader life-science tools market was estimated at $153.8B in 2025 and is projected to reach $230.1B by 2031, representing a 6.9% CAGR. Services are projected to grow at 11.4%, while next-generation sequencing is projected to grow at 16.9%. These figures place Tempus in faster-growing pockets of a large market.
Diagnostic laboratories are projected to be the fastest-growing end-user segment, with an 11.9% CAGR. That trend supports Tempus' emphasis on outsourced testing, sequencing, and integrated interpretation. AI adoption also provides a second tailwind, with healthcare and life-sciences AI software spending projected to reach $18.9B by 2027.
Tempus is growing faster than the broad market. Management targets approximately 25% top-line growth over the next three years, and analyst estimates place revenue at $1.97B in 2027 and $2.36B in 2028. The premium valuation therefore rests on continued share gains in oncology, MRD expansion, and larger data-modeling contracts.
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Tempus serves three primary customer groups. Physicians and healthcare providers use diagnostic tests, Hub, and algorithmic tools. Patients and payers support the clinical testing revenue stream through diagnostic orders and reimbursement. Pharmaceutical and biotechnology companies purchase de-identified data, modeling services, trial-matching capabilities, and research applications.
The biopharma customer is becoming especially important. Management said Merck signed a large strategic data and modeling collaboration and that Gilead expanded its relationship significantly from historical levels. Tempus also reported that approximately half a dozen customers have reached the scale of large, multiyear strategic agreements.
Customer concentration and renewal quality remain central economic variables. Management reported a history of renewing core data relationships at or above prior levels, while Q2 bookings of approximately $200M provided evidence of strong demand. The data business remains heavily weighted toward oncology and therapy selection, which creates both expertise and concentration benefits.
Tempus competes across several overlapping markets. Foundation Medicine, Caris Life Sciences, Guardant Health, NeoGenomics, Natera, Exact Sciences, Myriad Genetics, Quest Diagnostics, Labcorp, Personalis, and Illumina are relevant competitors across oncology diagnostics, hereditary testing, MRD, sequencing, and clinical data.
The competitive advantage is breadth. Tempus combines diagnostics, physician workflow, data licensing, AI models, and clinical-trial services in one platform. Many rivals are stronger in a single category, such as MRD, liquid biopsy, hereditary testing, or genomic profiling. Tempus' opportunity is to increase customer value by connecting those categories.
The risk is that breadth can become expensive complexity. Tempus reported a 20.1% operating margin loss for 2025 and negative EBITDA of $193.4M in the trailing financial data. A broad product set creates more opportunities, but it also demands sustained spending on sales, laboratories, software, compliance, and research.
Regulation is a major macro variable for Tempus. The life-science tools market faces stricter FDA oversight of laboratory-developed tests, while AI-enabled diagnostics require stronger validation, documentation, audit trails, and data integrity. Tempus' FDA approval for tumor-only xT supports a move toward ADLT pricing, and management has identified additional approvals as a source of potential average selling price growth.
Geopolitical pressure affects the wider tools market through export controls, dual-sourcing requirements, and procurement complexity. Talent is another constraint: market research identifies shortages of trained bioinformaticians as a limiter on industry expansion. Tempus' software and data model reduces reliance on selling physical instruments, but its laboratory operations still depend on specialized personnel and regulated processes.
The most favorable macro trend is the shift toward connected, cloud-based, AI-enabled workflows. Gartner projects healthcare and life-sciences AI software spending to rise from $11.6B in 2024 to $18.9B by 2027. Tempus' 500-plus petabyte data platform and oncology foundation-model work place it directly in that spending channel.
Tempus ended June 30, 2026 with $599.6M of cash against $1.37B of debt, a leverage profile that keeps financial flexibility under pressure despite improving operations.
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Get Full Access →Q2 2026 revenue rose 22% to $382.5M and the company generated $5.6M of net income plus $8.0M of adjusted EBITDA, showing the business is moving closer to profitability.
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Get Full Access →Management lifted 2026 revenue guidance to $1.595B-$1.605B and expects about $65M of adjusted EBITDA, signaling continued momentum in both segments.
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Get Full Access →Tempus trades at 10.1x enterprise value to revenue with trailing EPS of -$1.44 and free cash flow of -$190.8M, a combination that leaves limited room for disappointment.
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Get Full Access →The report’s Hold view reflects a strong operating story, but it still requires sustained growth, better cash generation, and successful integration of new assets before the valuation looks easier to defend.
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Get Full Access →Tempus AI has built one of the more distinctive growth platforms in precision medicine. Q2 2026 combined $382.5M of revenue, 64.4% gross margin, $5.6M of net income, 31% oncology-volume growth, and 36% Insights growth. The combination of diagnostics, clinical workflow, multimodal data, and AI modeling gives the company a strategic identity that is stronger than a conventional testing laboratory.
The investment case still turns on conversion. Tempus must convert revenue growth into consistent operating profit and positive free cash flow while integrating Personalis and managing $1.37B of debt. The $70.06 fair-value estimate and Hold recommendation recognize that the platform deserves credit for its growth, but the stock needs a better margin of safety before it becomes compelling for a moderate-risk portfolio.
For the medium-term investor, the cleanest path to a stronger rating is visible in the numbers already reported: sustained revenue above the $1.595B-$1.605B 2026 guide, adjusted EBITDA near the projected $65M, quarterly free cash flow moving decisively above zero, and continued expansion in MRD and Data & Applications. Until those results become repeatable, TEM remains an impressive business priced like the next stage of success has already arrived.
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Tempus AI, Inc. (TEM) rises after a new Recursion Pharmaceuticals partnership extension and RNA model agreement fueled renewed interest in its healthcare AI platform. Strong volume, recent FDA clearance, and ARPA-H funding added to the rally, though the stock now trades above several analyst targets.
Tempus AI is scaling quickly in oncology diagnostics and data licensing, but losses, negative free cash flow, and leverage keep the stock in Hold territory.
Tempus AI, Inc. (TEM) climbs after a positive Merck-Moderna melanoma result sparked fresh enthusiasm for precision oncology and MRD testing. The rally also follows solid Q2 results and renewed attention on Tempus’ Personalis acquisition, though the stock remains volatile and richly valued.