Tempus AI Soared 6.17%—Is Legal Turmoil Fueling a Short-Squeeze or a Collapse?

Summary
• Tempus AI (TEM) surged 6.17% intraday to $64.57, breaking above its 200-day moving average of $54.68
• A class-action lawsuit alleges the company exaggerated agreements and engaged in 'round-tripping' to inflate revenue
• Options volatility spiked, with 20 contracts trading above 50% implied volatility and 12.4% turnover in the leveraged ETF TEMT

Tempus AI’s 6.17% rally has ignited a firestorm of speculation as a securities lawsuit accuses the firm of fabricating revenue through affiliated deals. With the stock trading near its 52-week high of $91.45 and a 13.38% turnover rate, traders are scrambling to decipher whether this is a short-covering rally or a prelude to a collapse. The 52W range of $31.36–$91.45 and a -50.58x dynamic PE ratio underscore the stock’s extreme volatility.

Legal Allegations Spark Volatility Amid Short-Interest Surge
The DJS Law Group’s lawsuit has triggered a seismic shift in market sentiment. The complaint alleges Tempus AI inflated revenue through 'round-tripping' funds and unethical acquisitions, including the Ambry deal. This has created a dual narrative: short-sellers betting on a collapse and longs capitalizing on a potential short-squeeze. The stock’s 6.17% intraday jump—despite a -50.58x PE ratio—suggests aggressive short-covering, with options data showing 12.4% turnover in the leveraged ETF TEMT and 20 contracts trading above 50% implied volatility. The 52W high of $91.45 remains a distant target, but the 52W low of $31.36 looms as a critical support level.

Capital Markets Sector Mixed as BlackRock Rises 2.77%
Options Playbook: Leverage the Volatility with TEM20250822C65 and TEM20250822P66
• 200-day average: $54.68 (below current price)
• RSI: 49.51 (neutral)
• MACD: -0.72 (bullish divergence)
• Bollinger Bands: $65.25 (upper), $53.75 (lower)
• Support/Resistance: $57.68–$59.48 (30D), $58.33–$59.48 (200D)

Key levels to watch include the 52W high of $91.45 and the 52W low of $31.36. The Tradr 2X Long TEM Daily ETF (TEMT) offers 12.4% leverage but carries high risk due to the stock’s -50.58x PE ratio. For options, TEM20250822C65 (call) and TEM20250822P66 (put) stand out:

• TEM20250822C65: Call, strike $65, expiration 2025-08-22, IV 70.38%, leverage 17.87%, delta 0.57, theta -0.27, gamma 0.0495, turnover 209,526. High leverage and moderate delta suggest strong upside potential if the stock breaks $65.
• TEM20250822P66: Put, strike $66, expiration 2025-08-22, IV 80.63%, leverage 15.44%, delta -0.518, theta -0.0177, gamma 0.0439, turnover 42,392. High IV and moderate delta make this ideal for a volatility play if the stock dips below $66.

Payoff Calculation: A 5% upside to $67.75 would yield $2.75 per call (TEM20250822C65) and $1.75 per put (TEM20250822P66). Aggressive bulls should target a break above $65; bears should watch for a breakdown below $66. If $65 breaks, TEM20250822C65 offers upside potential. If $66 holds, TEM20250822P66 provides downside protection.

Backtest Tempus AI Stock Performance
The 6% intraday surge in Tempus AI (TEM) shares on August 8, 2025, was a significant event that warrants analysis. Following this surge, TEM's stock price rose to $60.63, a notable increase from the previous day's closing price. This movement was driven by several key factors:1. Revenue Forecast Increase: Tempus AI slightly raised its 2025 revenue forecast to $1.26 billion, up from the previous projection of $1.25 billion. This increase reflected the company's optimism about its future performance, which likely contributed to the stock price surge.2. Strong Quarterly Revenue: The company posted a quarterly revenue of $314.6 million, compared with $165.97 million in the same period the previous year. This substantial year-over-year growth in revenue underscored the company's financial strength and potential for continued growth.3. Clinical Volumes and Test Deliveries: Tempus AI experienced a significant re-acceleration of clinical volumes, with a 30% growth in the reported quarter. The company delivered over 212,000 next-generation sequencing tests, indicating robust demand for its services and a strong market presence.4. Positive Market Sentiment: The company's positive earnings report and the guidance for the full year 2025 above the consensus estimate likely boosted investor confidence. This positive sentiment can often lead to increased investor optimism and a subsequent rise in stock prices.In conclusion, the 6% intraday surge in TEM's stock price was a result of a combination of factors, including an increase in the annual revenue forecast, strong quarterly revenue, significant clinical volumes, and positive market sentiment. These factors collectively contributed to a strong day of trading activity and a notable increase in the company's stock price.

Act Now: Legal Uncertainty and Volatility Demand Precision
Tempus AI’s 6.17% rally is a high-stakes gamble between short-covering and legal fallout. The stock’s -50.58x PE ratio and 52W range of $31.36–$91.45 suggest extreme volatility ahead. Traders should monitor the 52W low of $31.36 as a critical support level and the 52W high of $91.45 as a distant target. The sector leader, BlackRock (BLK), rose 2.77%, signaling broader market optimism, but Tempus AI’s legal woes could isolate it. Watch for a breakdown below $66 or a surge above $65—either could trigger a 20%+ move.