Tempus AI Stock: Time to Double Down or Cut and Run?

Key Points

• Tempus AI reported a beat-and-raise quarter and may catalyze a rally. 
• The deal with AstraZeneca may lead to additional deals that accelerate its growth.
• Profits are forecasted by the end of the year, institutions are buying, and short-sellers are selling: A short-squeeze is possible. 

Tempus AI NASDAQ: TEM is an interesting AI story that operates a platform and library for diagnosis and drug discovery. The platform aids physicians by enabling personalized care for hard-to-treat illnesses and pharmaceutical companies like AstraZeneca NASDAQ: AZN, with advances in medicine impossible without computerized assistance. The company’s results are a testament to its utility, growing at a high double-digit pace in 2025, and could be the catalyst for a substantial and sustained rally. 

The Q1 2025 results reveal losses but also improving operational quality and cash flow. Among the critical details is the CFO's forecast for adjusted EBITDA profits by the end of the year. The profit forecast is tepid, about $5 million, but it is the first drop in a stream of profits that will aid shareholder value gains over the long term. 

Institutions Versus Short-Sellers: Sell-Side Action Drives Volatility in Tempus AI Stock

Short-selling and dilution are among the factors pressuring Tempus AI stock in 2025. Short interest reported in April was high at 26% and rising compared to the previous month, creating a headwind for the market. Short interest may remain high due to the lack of profits in 2025, but there is risk for short sellers and an opportunity for investors. The company is outperforming and raising guidance, and institutional activity is rising. Institutional holdings remain small at roughly 25% of the float, but their activity is a tailwind for the market that could pressure the short side into covering. 

The Q1 results were good. The company reported 75.4% year-over-year growth and expects acceleration this year. The strength was driven by gains in both segments, with the core genomics segment growing by 89% to $194 million, or roughly 76% of the revenue.

The data services segment was also strong but grew at a less robust 43% pace. The more significant factor in this stellar report is that gross profit increased at a leveraged 100% pace, aiding the more than 50% reduction in operating losses. 

The company raised its guidance due to the combination of Q1 strengths and a new deal with AstraZeneca. The deal will partner Tempus with AstraZeneca and Pathos to build the world’s largest multimodal oncology foundation, worth $200 million over the next three years, exclusive of other revenue it may generate. 

The net result is that management expects full-year revenue growth of 80%, up 500 basis points from Q1, with acceleration expected in the coming quarters. The AstraZeneca deal is also significant for the long-term outlook. Tempus already reported interest from other pharmaceutical giants and may announce additional deals soon. 

Analysts Can Provide a Catalyst for Tempus AI Stock in 2025

The analyst data tracked by MarketBeat is bullish for Tempus AI’s stock price, including increased coverage, a firming Moderate Buy rating, and increasing price targets. They see this stock rising by at least 10% from the early May price points and could catalyze a rally now that guidance has been updated. A significant series of positive revisions, including upgrades and price target increases, would improve investor confidence and lead capital to enter the market. 

The price action in early May suggests that capital has begun to reenter the market. Not only has the price action rebounded from the new lows, but it has also tested and confirmed support at a cluster of moving averages. Those include the critical 30- and 150-day EMAs representing short-term traders and long-term investors, and they are likely a launching point for a rally. Assuming the market follows through on this signal, it could increase to $70 by early summer.