Tempus AI, Inc. (TEM): A Bull Case Theory 

We came across a bullish thesis on Tempus AI, Inc. on R. Dennis’s Substack by OppCost. In this article, we will summarize the bulls’ thesis on TEM. Tempus AI, Inc.’s share was trading at $64.57 as of January 28th. TEM’s trailing P/E was 41.53 according to Yahoo Finance.

Tempus AI, Inc. (NASDAQ: TEM) operates at the forefront of precision medicine, combining high-throughput genomic diagnostics with advanced AI technology. The company has built one of the world’s largest multimodal datasets in oncology and cardiology, integrating clinical, molecular, and imaging data. This unique dataset drives its high-margin Data & Services segment, which licenses insights to pharmaceutical partners for drug discovery and clinical trial optimization, creating a recurring revenue stream that subsidizes its lower-margin genomics testing.

The acquisition of Ambry Genetics in early 2025 expanded Tempus’s germline testing capabilities, while the purchase of Paige.AI added digital pathology and AI-driven slide analysis, further strengthening its data moat. These moves have created a “flywheel” effect, where diagnostic operations feed the data business, which in turn funds growth and innovation. Financially, Tempus reached positive Adjusted EBITDA in Q3 2025, marking a critical inflection point.

Gross margins are improving toward software-like levels, with the Data & Services segment approaching 70% margins. The balance sheet is strong, with $764 million in cash and low-cost convertible debt, giving the company flexibility for further growth or strategic acquisitions. The stock currently trades at $64, providing an attractive entry point given the company’s robust growth trajectory, recurring revenue model, and expanding competitive advantage.

While GAAP profitability remains negative due to stock-based compensation and amortization, the underlying business is cash-generating and operationally sound. Regulatory risks around LDTs and data privacy remain, but the combination of a sticky customer base, accelerating AI integration, and unmatched multimodal data positions Tempus for significant upside. With near-term catalysts from scaling its Data segment and AI platforms, TEM offers a compelling bullish opportunity for investors seeking exposure to the digitization and AI-driven transformation of healthcare.

Previously, we covered a bullish thesis on Tempus AI, Inc. (TEM) by Oliver | MMMT Wealth in April 2025, highlighting its diversified health tech business and strong revenue growth. TEM’s stock has appreciated by approximately 49.36% since our coverage due to momentum and sector tailwinds. OppCost shares a similar thesis but emphasizes the impact of strategic acquisitions, the “flywheel” effect, and positive Adjusted EBITDA as key catalysts.

Tempus AI, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held TEM at the end of the third quarter which was 27 in the previous quarter. While we acknowledge the risk and potential of TEM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TEM and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.