Tempus AI stock price has rebounded this year as demand for artificial intelligence solutions jumped sharply. The TEM stock also jumped to $61 after the company completed its acquisition of Ambry Genetics. Its market cap has moved to over $9 billion, making it one of the biggest niche AI company. So, is Tempus AI stock a good investment?
Tempus AI is a growing AI brand
The AI industry is seeing substantial growth this year, helped by strong demand from consumers and companies. A good example of this was the strong Palantir earnings, which showed robust demand from corporate clients.
The AI industry will disrupt many industries. It has already disrupted key sectors like entertainment, automobile, and hospitality.
The healthcare industry is one with substantial potential for disruption because of the vast amounts of data and its market size. Studies estimate that the sector is worth $13.3 trillion and will get to $21 trillion in the next few years.
Tempus AI is one of the top companies aiming to become a big player in the sector by providing AI solutions to hospitals, life sciences, and other top areas. It is doing that by having one of the biggest libraries of clinical and molecular data.
Tempus AI offers three key solutions: Tempus OS, Tempus Hub, and Tempus Lens. OS is the key platform that combines data, technology, and generative AI. Tempus Hub is a platform that streamlines workflows, while Lens provides an analytical platform for researchers to find multimodal data.
Tempus AI is seeing strong growth as companies remain interested in the AI industry. Its annual revenue has jumped from $62.1 million in 2019 to over $531 million in the last financial year. Analysts expect that its revenue for 2024 will be $693 million, followed by $965 million this year.
Part of this growth will come from its acquisition of Ambry Genetics, a firm using AI to advance precision medicine. It spent $375 million to fund the acquisition, with $225 million being in cash and $100 subject to a lock-up agreement.
Read more: Cathie Wood bets big on Tempus AI: Is it the next big thing in health-tech?
Growing company, but valuation concerns remain
The most recent financial results showed that Tempus AI’s revenue rose by about 33% to $180 million in the third quarter. Analysts expect the firm’s Q4 revenue to be about $200 million.
Most of its revenue came from the data and services business, while the genomics segment is growing more.
This growth will likely continue in the coming months as companies in the healthcare industry seek to boost efficiency. As a result, the management expects its annual revenue to be $700 million, representing a 32% annual growth rate.
Investors’ main concern is that Tempus AI is highly overvalued, with a $9 billion valuation. This is a big concern since the firm is not profitable yet. While this is a big concern, the firm may justify its valuation with its strong growth momentum.
Tempus AI stock price analysis
TEM stock chart by TradingView
The four-hour chart shows that the TEM share price has rebounded in the past few weeks. It has moved from a low of $32 earlier this year to over $60 today. The stock has moved above the 25-hour moving average.
Further, the stock moved above the weak, stop & reverse point at $60. The average directional index (ADX) has moved upwards, a sign that it has a strong momentum. Therefore, the stock will likely keep rising as bulls target the key resistance point at $80, its highest swing in 2024.
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