Tempus AI’s Q2 Earnings Drive 4.96% Rally as $1.35 Billion Trading Volume Surges 35.69%

Tempus AI (TEM) surged 4.96% on August 13, 2025, with a trading volume of $1.35 billion, a 35.69% rise from the previous day. The stock’s performance followed its Q2 2025 earnings report, which highlighted an 89.6% year-over-year revenue jump to $314.6 million, driven by Genomics and Data & Services segments. Adjusted EBITDA losses narrowed significantly to $5.6 million, bringing the company closer to breakeven. A $750 million convertible note offering post-quarter bolstered liquidity, while management raised full-year revenue guidance to $1.26 billion. Despite these positives, legal challenges including class-action lawsuits related to alleged securities law violations could weigh on investor sentiment.

Strong operating leverage and margin expansion underpinned the results, with gross profit more than doubling to $195 million and adjusted gross margin rising to 62%. Strategic partnerships, such as a $200 million three-year deal with AstraZeneca, underscored the company’s growth trajectory. However, the stock remains unprofitable on a GAAP basis, and its forward P/S ratio of 7.98 exceeds industry averages, suggesting potential overvaluation. Analysts at Morgan Stanley raised their price target to $68, reflecting cautious optimism, though legal risks and regulatory hurdles for new diagnostics could delay profitability.

The strategy of buying the top 500 stocks by daily trading volume and holding them for one day from 2022 to 2025 yielded a compound annual growth rate (CAGR) of 6.98%. However, the approach faced a maximum drawdown of 15.46% during the backtest period, with a significant decline in mid-2023 highlighting the volatility inherent in such strategies. Investors may need to balance high-volume opportunities with risk management to navigate market fluctuations effectively.