Tempus AI (TEM) has seen a significant surge on Wednesday, with its stock climbing 14.62% in just one day. The significant boost in TEM stock followed the announcement of a multiyear collaboration with AstraZeneca (AZN) and Pathos AI. As part of the deal, Tempus AI will receive $200 million in data licensing and model development fees from AstraZeneca, nearly matching the company’s total revenue for Q4 2024. This highlights the potential of the company’s AI platform and data.
The surge has grabbed the attention of investors and analysts, raising questions about whether the stock is a solid investment. As an early leader in healthcare AI software, Tempus AI shows substantial long-term promise. However, risk-averse investors may want to explore other options, as the company is still unprofitable. Despite this, Tempus AI could be a smart pick for aggressive growth investors looking for high potential in the healthcare AI space.
More About Tempus AI’s New Oncology Deal
As part of its expanded partnership with AstraZeneca, Tempus AI, along with Pathos AI, will work to create an AI model focused on oncology. This model aims to improve patient care, discover new drug targets, and assist in developing cancer treatments. With Tempus’ vast collection of de-identified oncology data and AI-powered platform, the team plans to generate valuable clinical and biological insights to advance precision medicine and therapeutic development in oncology.
Meanwhile, Tempus CEO Eric Lefkofsky highlighted the company’s decade-long investment in data collection as a key factor in the success of its foundation model.
Needham’s Top Analyst Stays Bullish
Following the announcement, Needham’s four-star-rated analyst Ryan MacDonald reiterated his Buy rating on TEM stock, predicting over 40% upside.
MacDonald stated that the collaboration marks a first for Tempus and positions the company to boost its data and other revenue streams beginning in Q2 2025. Additionally, the agreement is expected to improve margins, bringing financial benefits that will positively impact Tempus’s fiscal year 2025.
He also believes that this partnership may open doors for Tempus to forge new relationships or expand existing ones with other leading pharmaceutical companies.
Is TEM a Strong Buy?
On TipRanks, TEM stock has received a Moderate Buy rating based on five Buy and five Hold recommendations. The Tempus AI share price forecast is $63.33, which implies an upside of 26% from the current levels.
