2026Q2 Tempus AI Inc. (TEM)

Tempus AI operates at the highly complex intersection of molecular genomics and artificial intelligence, functioning essentially as a data aggregation and clinical deployment platform for precision medicine. The company’s core business is bifurcated into two primary operational segments: Diagnostics (Genomics) and Data & Applications. The Diagnostics segment utilizes next-generation sequencing (NGS) to provide hereditary risk assessment, therapy selection, and MRD monitoring7. The Data & Applications segment leverages a proprietary dataset exceeding 500 petabytes of clinico-genomic and imaging records to license insights, cohort analytics, and AI modeling to global biopharmaceutical firms The structural industry trends strongly favor Tempus’s dual-sided business model. The global shift toward personalized oncology relies entirely on the availability of structured, longitudinal patient data. Tempus benefits from a significant economic moat characterized by deep network effects. As the company sequences more physical biopsies in its laboratories, its centralized database scales, which subsequently improves its AI-driven foundation models. These enhanced algorithms attract larger data-licensing contracts from biopharma clients and drive higher diagnostic volumes from clinical oncologists, perpetuating a virtuous cycle of data generation1. High switching costs further protect this moat; once a biopharmaceutical company integrates Tempus’s data architecture into its clinical trial discovery phases, the friction and cost of migrating to a competing repository are substantial. Profitability trends reveal a business navigating the classic transition from high-cash-burn hyper-growth to operating leverage. While gross margins have steadily improved—expanding from 39.6% in 2023 to over 64% in recent quarters—the sheer volume of operating expenses, largely driven by technology research and development and massive stock-based compensation (SBC), has historically kept the company deeply unprofitable on a GAAP basis13. Sales trends, however, demonstrate extreme velocity, with consolidated revenue expanding 83.4% year-over-year in 2025 to $1.27 billion, following 30.4% growth in 2024.