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Tempus AI, Inc. - Class A Common Stock
Our verdict on Tempus AI, Inc. - Class A Common Stock isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →Does management do what it says?
The company has received the initial $50 million upfront payment as of April 2025 and has recognized $41.7 million in revenue from Pathos for the nine months ended September 30, 2025. (2 in progress across 2 tracked commitments)
“We expect to maintain high levels of investment in product innovation over the coming years as we continue to develop new laboratory assays, develop algorithms, and expand our Platform into new disease areas.”
Management has lowered the percentage of RPO expected to be recognized over the next 12 months from 59% (as of March 2025) to 49% as of September 30, 2025, suggesting a lengthening of contract fulfillment timelines. (1 revised across 1 tracked commitment)
“The Company’s remaining performance obligations related to multi-year contracts was $360.2 million as of September 30, 2025, of which the Company expects to recognize approximately 49% as revenue over the next year.”
SG&A expenses increased significantly in absolute dollars ($212.6M vs $154.6M YoY) and also increased as a percentage of revenue (61.1% in Q1 2026 vs 60.5% in Q1 2025), contrary to the long-term goal of modest percentage decreases. (1 revised across 1 tracked commitment)
“Selling, general and administrative 212,594 [for 2026] 154,627 [for 2025] ... Total net revenue 348,116 [for 2026] 255,737 [for 2025]”
Pathos is committed to paying the company $200 million in data license fees over a three-year period. — target: $200 million (+2 more commitments)
“(iii) Pathos will pay the Company data license fees of $200 million over a three-year period, including an upfront payment of $50 million paid as of April 2025”
Management expects technology research and development expenses to increase in absolute dollars for the foreseeable future. — target: Increase in absolute dollars (+1 more commitment)
“We expect that technology research and development expenses will increase in absolute dollars for the foreseeable future as we continue to invest to support these activities.”
See the full cited Management analysis of Tempus AI, Inc. - Class A Common Stock
How durable is the business?
The company significantly expanded its proprietary technology moat through the acquisition of Ambry (hereditary cancer screening) and Deep 6 AI (clinical trial matching), adding substantial developed technology assets and customer relationships. (3 expanding)
“Each product line is designed to enable and enhance the other, thereby creating network effects in each of the markets in which we operate. We are able to commercialize records multiple times, both at the time a test is run and thereafter.”
The Data and services segment grew 36% year-over-year, largely due to a $16.5 million increase in demand for 'Insights' products, specifically the Pathos Foundation Model agreement. (4 expanding)
“Unlike traditional diagnostic labs, we can incorporate unique patient information, such as clinical, molecular, and imaging data... we built both a technology platform to free healthcare data from silos and an operating system to make this data useful, the combination of which we refer to as our Platform.”
The Genomics segment (formerly Diagnostics) saw massive expansion, primarily driven by the acquisition of Ambry Genetics in February 2025, which contributed $97.3 million in the quarter. Organic oncology test volume also grew from 66,500 to 84,000 tests. (2 expanding)
“Genomics revenue of $241,843 for the three months ended June 30, 2025... an increase of 115%... primarily due to an increase in the number of Oncology tests and the addition of Hereditary tests through the acquisition of Ambry.”
The moat is strengthening as the company successfully 'commercializes records multiple times.' Data generated in the lab (Diagnostics) is structured and licensed to pharma partners (Data), creating a self-reinforcing loop of clinical and molecular data growth. (1 expanding)
“We are able to commercialize records multiple times, both at the time a test is run and thereafter... The data generated in our lab or ingested into our platform as part of the Diagnostics product line is structured and de-identified, prior to commercialization.”
The Data and Applications segment grew 31% year-over-year, driven by increased demand for 'Insights' products (de-identified data licensing) and new customer adoption. Revenue share shifted slightly downward to 25% of total revenue due to the faster inorganic growth in the Diagnostics segment. (3 expanding across 2 engines)
“Data and applications 87,018 ... 41% ... The increase in Data and applications revenue for the three months ended March 31, 2026, compared to the same period in 2025, was driven primarily by an increase of $21.8 million and $3.0 million from increased demand for our Insights and Next products, respectively.”
See the full cited Business Model analysis of Tempus AI, Inc. - Class A Common Stock
Where does growth come from?
The company is actively pursuing a new trend of inorganic growth through major acquisitions, specifically the pending $375 million acquisition of Ambry Genetics. (5 new trend across 5 signals, 1 leading indicator)
“The Paige Acquisition is expected to allow the Company to grow its dataset and establish a strong footprint in digital pathology with an industry leading technology portfolio.”
Genomics revenue (diagnostics) is accelerating significantly, nearly doubling year-over-year. This is driven by a 20% increase in oncology test volume and the massive addition of hereditary testing volume following the Ambry acquisition in February 2025. (4 accelerating, 1 steady across 5 signals, 1 leading indicator)
“The increase in Diagnostics revenue for the three months ended March 31, 2026, compared to the same period in 2025, was primarily due to an increase in the number of Oncology tests and the addition of Hereditary tests through the acquisition of Ambry in February 2025.”
Data and services revenue is accelerating, with Q2 2024 growth (32%) outpacing the full first-half growth rate (31%), driven by high demand for 'Insights' products. (3 accelerating, 2 steady across 5 signals)
“Data and applications revenue increased $25.1 million, or 41%, for the three months ended March 31, 2026 compared to the same period in 2025.”
Adjusted EBITDA losses are narrowing consistently, showing a 15.6% improvement in Q2 2024 compared to Q2 2023, indicating a trend toward operational break-even. (5 accelerating across 5 signals)
“Adjusted EBITDA was $(2,833) thousand for the three months ended March 31, 2026, compared to $(16,174) thousand for the three months ended March 31, 2025.”
The company maintains a strong backlog of non-cancelable multi-year contracts. While the total RPO is reported at $194.3 million for these specific long-term deals, the company expects to recognize 59% of this as revenue within the next 12 months, indicating strong near-term visibility. (2 new trend, 3 steady across 5 signals)
“The Company’s remaining performance obligations related to multi-year contracts was $378.4 million as of March 31, 2026, of which the Company expects to recognize approximately 50% as revenue over the next year.”
See the full cited Future Growth analysis of Tempus AI, Inc. - Class A Common Stock
What could break the thesis?
The risk is easing slightly in terms of quarterly loss magnitude ($42.8M in Q2 2025 vs $552.2M in Q2 2024), though the accumulated deficit remains a long-term vulnerability. (1 easing, 2 stable, 1 intensifying, 1 high-severity)
“We have incurred significant losses and negative cash flows from operations since our inception, and as of March 31, 2026, we had an accumulated deficit of $2.5 billion.”
The risk is stable but remains high; while Medicare reimbursement rates increased, the company still relies heavily on securing reimbursement to achieve financial performance. (2 stable, 1 intensifying, 1 high-severity)
“As of December 31, 2025, we had received payment on approximately 55% of our clinical oncology NGS tests and 50% of our hereditary tests across all payers performed from January 1, 2023 through December 31, 2024.”
The risk is intensifying as Tempus has filed counterclaims and a separate patent infringement complaint against Guardant, expanding the scope of the legal battle. (5 intensifying, 1 high-severity)
“The complaint alleges that the Tempus xF, Tempus xF+, Tempus xM Monitor and Tempus xM MRD products use liquid biopsy technology that infringes five Guardant U.S. patents. The complaint seeks injunctive relief, unspecified monetary damages (including enhanced damages), a future mandatory royalty, costs and attorneys fees.”
The risk is intensifying as cloud and software costs rose to $36.1M in Q3 2025 from $24.7M in Q3 2024. Total cloud costs for the nine-month period reached $93.8M. (1 intensifying)
“Cloud and software [expenses] $39,333 [for three months ended March 31, 2026] compared to $24,866 [for 2025].”
The risk is stable as the company continues to integrate Ambry, which contributed $97.3 million in revenue but requires significant amortization and personnel costs. (3 stable, 1 emerging)
“Total acquisition price [for Ambry] $692,343... The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill.”
See the full cited Risk analysis of Tempus AI, Inc. - Class A Common Stock
Tempus AI, Inc. - Class A Common Stock analysis by filing period
Read the full thesis on Tempus AI, Inc. - Class A Common Stock
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