Should You Buy, Hold or Sell Tempus AI Stock Heading Into 2026?

Tempus AI’s TEM strategic focus for 2026 centers on expanding its AI-driven precision medicine platform by scaling the diagnostics business, growing data and AI capabilities and strengthening relationships with healthcare providers and pharmaceutical companies. These initiatives are supported by a strong commercial pipeline, with total contract value exceeding $1.1 billion. This provides significant visibility into future revenues and supports the company’s continued growth trajectory.

The company’s confidence in its growth outlook is supported by strong segmental performance in 2025. It delivered robust financial results, with total revenues increasing 83.4% year over year to $1.3 billion. The Diagnostics segment was the primary growth driver, generating $955.4 million in revenues, representing 111.5% year-over-year growth, supported by strong growth in Oncology and Hereditary testing volumes. At the same time, the Data and Applications segment continued to scale rapidly, generating $316.4 million in revenues, up 30.9% year over year, due to strong momentum in the Insights data licensing business.

Tempus peers such as Inspire Medical Systems INSP and 10x Genomics TXG are also expected to maintain growth momentum heading into 2026. While Inspire Medical Systems continues to benefit from rising adoption of its sleep apnea therapy devices, 10x Genomics is advancing growth through expanding demand for single-cell and spatial genomics technologies.

TEM’s Stock Price Performance

During the past year, TEM’s shares have increased 15.7%, reflecting a sharp reversal in sentiment across the Zacks Medical Info Systems industry, which declined 25.2%. Meanwhile, INSP stock price was down 64.9% over the same period. However, TXG has fared relatively better, posting a gain of 96.5%. The S&P 500 index is also up 23.2% over the same period.

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Accelerating Oncology Diagnostics Growth

Tempus expects strong growth in its oncology diagnostics segment, driven by the increasing adoption of genomic sequencing in cancer care. A key driver of this growth is the expansion of its comprehensive test portfolio, which includes xT - DNA tumor profiling, xR - RNA profiling, xF - liquid biopsy, xH - hematologic cancer testing and xE - whole exome sequencing. These tests are supported by Tempus’ integrated platform that combines molecular data with clinical information and AI-driven insights to provide more actionable results for physicians. Growth is also supported by rising physician adoption.

Tempus is integrated with more than 5,500 hospitals and over 8,500 oncologists who regularly order these tests, allowing it to deliver insights directly within clinical workflows. Additionally, broader industry trends toward precision oncology and genomic testing continue to drive increasing demand for sequencing-based diagnostics. Together, these factors position Tempus to sustain approximately 30% growth in its core oncology diagnostics business.

Scaling the Minimal Residual Disease Opportunity

Scaling the Minimal Residual Disease (“MRD”) opportunity is another important growth initiative for Tempus. MRD testing, which helps detect traces of cancer after treatment, has shown strong early momentum, with volumes growing 56% quarter-over-quarter in the fourth quarter of 2025. Currently, only a small portion of the company’s sales force is actively selling the MRD product, meaning that commercialization has been intentionally limited while the company works through reimbursement and market development.

Management believes that demand for MRD testing could grow significantly once the product is fully commercialized and broader reimbursement coverage is established. As a result, Tempus’ strategic focus for 2026 is to gradually expand MRD commercialization while securing payer reimbursement, positioning the product to become a larger contributor to growth.

Focus on Clinical Applications and Healthcare Software

Beyond diagnostics and data licensing, Tempus is also focused on monetizing clinical applications and healthcare software designed for healthcare providers. The company is developing several digital tools, including TIME – an AI-powered clinical trial solution that accelerates patient matching and enrollment in oncology and Next – an AI-enabled care pathway intelligence platform. In addition, Tempus is building other AI-driven decision support solutions that provide actionable insights to clinicians. These applications not only create new revenue opportunities but also expand the company’s presence within hospital systems. This initiative generates additional clinical data that further strengthens its data and AI ecosystem.

TEM EPS & Sales Growth

Per the Zacks Consensus Estimate, Tempus is expected to experience 25.4% improvement in 2026 revenues. Earnings per share are expected to remain negative, but up 39.3% over 2025.

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Key Challenges for TEM

Ongoing tensions between Iran and the United States could affect the global medical industry through potential supply-chain disruptions and logistical delays, along with higher raw material and energy costs driven by conflict-related oil price volatility. These factors may also lead to medicine price fluctuations and increased regulatory and compliance complexity as geopolitical pressures influence trade and operations.

At the same time, although the company reported positive adjusted EBITDA, GAAP losses persist due to substantial stock-based compensation, higher amortization of acquired intangibles from the Ambry transaction and a one-time loss related to debt extinguishment. Consequently, current profitability remains largely non-GAAP-driven and the lack of GAAP net loss guidance limits visibility into when sustainable GAAP profitability may be achieved.

TEM’s Shares Look Overvalued

Tempus stock is not so cheap, as suggested by the Value Score of F.

The stock is currently trading at a 12-month forward price-to-sales (P/S) ratio of 5.64X, which is higher than the industry median of 5.47X.

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Here’s How to Play TEM Stock Now

Despite Tempus AI’s strong revenue momentum and expanding role in precision medicine, the near-term risk-reward profile appears less favorable for investors. The stock already trades at a premium valuation relative to the industry. In addition, geopolitical risks and potential cost pressures could create operational headwinds for the broader medical space.

The negative earnings estimate trend reinforces the outlook of continued near-term challenges. With limited visibility into sustained earnings improvement, the current valuation leaves little room for execution missteps. As a result, investors may consider booking profits now and reallocating capital to better-positioned opportunities from this Zacks Rank #4 (Sell) stock.

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This article originally published on Zacks Investment Research (zacks.com).

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