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- The Gene Machine That Keeps Printing Growth
The Gene Machine That Keeps Printing Growth
Noah Zelvis
October 01, 2025
Revenue is doubling and new partnerships are stacking. The question is whether you get positioned before the next run.
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Genomics Just Plugged Into the AI Hype Cycle
Tempus AI (NASDAQ: TEM) isn’t your everyday tech ticker. Founded in 2015, the company sits at the sweet spot where artificial intelligence meets genomics, decoding DNA and running next-gen tests for hospitals, drugmakers, and researchers.
The past year has been a breakout. Revenue is nearly doubling, gross margins are rising, and losses are narrowing from catastrophic to manageable.
Partnerships with giants like AstraZeneca and Boehringer are showing that it’s not just a science project, but a company with serious commercial traction.
Recent momentum drivers:
Record revenue: $315 million in Q2, up 90% year over year.
Improving margins: Gross margin at 61%, a sharp turn from earlier years.
Smaller losses: Net loss narrowed to $43M from over $550M a year ago.
Product expansion: A new liquid biopsy test unveiled this summer puts Tempus deeper into cancer monitoring.
Partnerships: Licensing deals with top pharma names turn their data into recurring cash flows.
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The Setup is Big Ideas, Bigger Market
Genomics alone is a multi-billion-dollar market. AI in healthcare is another multi-billion-dollar trend.
Tempus has strapped itself to both, with a business model that makes sense: run high-volume genetic testing while monetizing the data with pharma and biotech clients.
The bull case is simple. If Tempus can keep revenue growth anywhere near the current clip, it becomes the default U.S. play on genomics + AI.
There aren’t many other public pure-plays at scale, which gives it scarcity value.
The bear case is also simple. High valuations and unproven profitability make it vulnerable to shocks, short reports, or clinical/regulatory missteps.
Investors are paying today for the promise of tomorrow.
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Where the Upside Comes From
Revenue velocity. Growth at 90% YoY won’t last forever, but even a downshift to 50–60% still puts Tempus in elite territory.
Data licensing. Pharma loves validated data, and Tempus is building one of the largest AI-ready genomic datasets in the world. That’s sticky, high-margin business.
New diagnostics. Liquid biopsy, ovarian cancer tests, and companion diagnostics in global trials expand the product range and open doors to new reimbursable markets.
Strategic partners. Collaborations with AstraZeneca, Boehringer, and Verastem put Tempus into late-stage drug programs, long-term embedded revenue streams if drugs succeed.
Policy tailwinds. Precision medicine has bipartisan support in Washington. Funding, Medicare approvals, and FDA fast-tracks all lean in this direction.
Action: Consider starter exposure with 1–2% portfolio sizing, focusing on dips under $80. Keep cash ready to add on proof of consistent profitability progress.als. |
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*Past performance is no guarantee of future results. Investing involves risk. This material does not constitute investment, legal, accounting, or tax advice. Zacks Investment Research is not a licensed dealer, broker, or investment adviser.
The Numbers And Why They Matter
Revenue: $315M in Q2 vs $166M last year, monster growth.
Gross margin: 61%, meaning the testing and data model is scaling efficiently.
Net loss: $43M vs $552M a year ago. Still negative, but a massive improvement.
Backlog / pipeline: Licensing contracts with pharma are multi-year; this creates recurring revenue visibility.
Balance sheet: Positive free cash flow of ~$19M, giving Tempus runway without constant fundraising.
These are not the numbers of a meme stock. They’re the numbers of a high-growth, still-loss-making but increasingly credible company
Risks You Can’t Ignore
Valuation premium. With a $14B market cap and no profits, every hiccup matters. Short sellers have already targeted it once this year.
Profitability lag. Management hasn’t put a firm date on breakeven, and healthcare companies often take longer than expected to scale sustainably.
Execution risk. Adding new products and expanding pharma partnerships sounds great, but delays, pricing pressure, or regulatory issues could crimp growth.
Headline risk. Genomics and data businesses always face privacy/regulatory scrutiny; one bad news cycle can take the air out of the stock.
Volatility. Shares have doubled this year but have also swung from the low $30s to nearly $100 in less than 12 months. Expect turbulence.
What Would Change Our Mind To Bearish
Three quarters in a row of slowing revenue growth below 30%.
Gross margins rolling back under 50%.
A failed major partnership or regulatory setback on a new test.
Additional short reports that raise valid governance concerns.
If these show up, the narrative breaks, and the multiple compresses.
What Could Go Right And Fast
Profitable quarter. Even adjusted breakeven would signal the business is scaling sustainably.
Major pharma expansion. Another AstraZeneca-type deal, especially tied to late-stage trials, would validate the data licensing model.
Regulatory wins. FDA or Medicare approvals for new diagnostics add credibility and expand addressable markets.
M&A optionality. A large healthcare or AI giant could view Tempus as a strategic acquisition, paying a premium for its dataset and diagnostics engine.
What the Tape Is Saying
The stock’s doubled this year, climbing from the mid-$30s to above $80, with an intraday high near $98. That’s an incredible run.
Technicals show it’s holding above its 50-day and 200-day averages, suggesting strong momentum. But RSI is flashing near overbought territory, meaning a breather could come.
Traders should expect pullbacks, but dips into the mid-$70s have been bought aggressively. Volume trends remain supportive, though watch for fading strength after spikes.
Action: Stage entries on pullbacks, don’t chase breakouts. Use stops around $70 to manage downside. |
Valuation & Positioning
At ~$81 a share, Tempus trades at nosebleed multiples with no P/E to speak of.
Bulls argue this is the price of owning the only scaled genomics + AI play with triple-digit growth. Bears counter that the premium leaves no room for error.
For now, this is a satellite position stock, not a core holding.
Think of it as a call option on the future of AI-driven healthcare, with real assets, real partners, and real revenue growth, but still a long way from being safe.
Final Word: Buy the Science, Manage the Risk
Tempus AI is one of the market’s most exciting growth stories right now.
The combination of surging revenue, strategic partnerships, and AI-driven healthcare puts it in a rare category.
But the volatility, valuation, and profitability gap mean discipline is essential.
The asymmetry is there, if the company keeps executing, the stock could break into three digits and stay there. If not, it’s another high-beta biotech flameout.
The only way to play it is with patience, small sizing, and a willingness to add only as the evidence builds.
Action Recap ✅ Starter size ≤2% on pullbacks under $80 |
That's our coverage for today; thanks for reading! Reply to this email with feedback or any tech stocks you want me to check out.
Best Regards,
—Noah Zelvis
Tech Stock Insider