Tempus AI's Data Business Keeps Scaling Up: Can the Growth Pace Last?
Tempus AI TEM, a Chicago-based company focused on precision medicine, is building network effects via its three interconnected product lines. In the first quarter of 2025, revenues in its Data and Services segment increased 43.2% year over year to $61.9 million, driven by a 58% growth in Insights, the company's data licensing business. Gross profit outpaced revenue growth, up 65.2% with only a modest 3% increase in the cost of revenues. The business has scaled significantly, securing deals with companies like Novartis, Merck EMD, Takeda and United Therapeutics over the past year. Against that backdrop, Tempus' ability to sustain such strong growth rates in Data and Services is particularly impressive.
Most of these contracts span multiple years, with total remaining contract value reflecting data and services yet to be delivered. Several recent developments are setting the stage for the momentum to continue. A major highlight is Tempus AI's $200 million data and modeling license agreement with AstraZeneca AZN and Pathos to build the world's largest foundation model, bringing AZN's total remaining contract value to over $1 billion as of April 30. AZN and Pathos are also covering a large portion of the compute costs to train the model. Notably, the agreement's non-exclusive nature allows Tempus to license data and build models with others in the future.
The company also expanded its collaboration with Illumina, which will use its multimodal data platform to accelerate clinical benefits of molecular profiling across all major diseases. In May, Tempus inked a large data agreement with Boehringer Ingelheim focused on biomarker development and novel discovery efforts, building on their past collaboration. Further, the company's new oncology-focused platform, Loop, is already in use by a large pharmaceutical company to prioritize drug targets in patient subpopulations with severe unmet needs.
TEM's Key Competitors in Data and Services
ICON ICLR, an Ireland-based contract research organization, experienced a significant increase in overall biotech opportunities and a modest uptick in project win rates in the first quarter of 2025. However, it was ultimately offset by an increased number of customer-cancelled request for proposal (RFP) opportunities. In large pharma, RFP opportunities were softer in the quarter; still, ICLR's high success rate underscored its strong positioning as a strategic partner.
IQVIA 's IQV Technology & Analytics Solutions business continued the strong recovery trend in the first quarter of 2025, with clients launching new drugs and executing their commercial roadmaps. However, IQV faced slower decision-making from clinical customers on new programs, reflecting broader macroeconomic pressure and industry caution. IQVIA reported a 10% increase in average time from RFP issuance to award in the quarter, both year over year and sequentially.
TEM Outperforms Peers, Industry, But Valuation Stretched
Year to date, Tempus AI shares have surged 102.5%, outperforming the industry's 18% growth and also delivering stronger returns than IQV and ICLR.
Image Source: Zacks Investment Research
TEM currently trades at a forward 12-month Price-to-Sales (P/S) of 8.47X compared to the industry average of 5.83X.
Image Source: Zacks Investment Research
TEM Stock Estimate Trend
As you can see, earnings estimates for Tempus AI in 2025 and 2026 are showing a mixed picture.
TEM stock currently carries a Zacks Rank #4 (Sell). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Research Chief Picks Stock Most Likely to "At Least Double"
Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren't winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%.
See Our Top Stock to Double (Plus 4 Runners Up) >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
AstraZeneca PLC (AZN): Free Stock Analysis Report
ICON PLC (ICLR): Free Stock Analysis Report
IQVIA Holdings Inc. (IQV): Free Stock Analysis Report
Tempus AI, Inc. (TEM): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CTV News
22 minutes ago
- CTV News
Final budget numbers land: Alberta posts $8.3-billion surplus in 2024-25 fiscal year
The final numbers are in on last years' Alberta budget, and the bottom-line figure is an $8.3-billion surplus. That's $2.5 billion more than officials had expected to get. Finance Minister Nate Horner says the jump is because of more tax revenue from a growing population coupled with oil royalties that were higher than expected. Horner says just over $5 billion of the surplus is cash the province can spend, and the government will split it between its rainy-day Heritage Fund, paying down debt and savings. However, the good times are not expected to last. Horner's current budget for the fiscal year that began in April is expected to end next spring with a $5.2-billion deficit, with more multibillion-dollar deficits in the years after that. The province says the red ink is expected because of volatile oil prices, tax cuts and global events like the trade tariffs imposed by the United States. This report by The Canadian Press was first published June 27, 2025.
CTV News
33 minutes ago
- CTV News
Trump terminating Canada-trade talks a ‘negotiating tactic': Eric Ham
Watch U.S. political analyst Eric Ham calls Trump's 'abrupt' ending to trade talks with Canada a 'negotiating tactic' as he feels he has the 'wind at his back.'
CTV News
37 minutes ago
- CTV News
‘Plywood Avenue': Chamber asking city to help with rising cost of vandalism, security on businesses in Saskatoon
Taylor Cross has had her fair share of run-ins with safety concerns and vandalism nearly two years after opening Seven Sundays on 2nd Avenue. A little more than a month ago, Cross received a text message from a fellow business owner that one of her windows was smashed. She arrived at work minutes later to see that it was from a large rock thrown through the window. 'It was definitely the straw that broke the camel's back for me. Being a new business, we're just shy of two years being downtown. It's unfortunate when our staff doesn't always feel safe coming in to work downtown.' Cross says she has learned plenty about operating a business on 'Plywood Avenue,' as other business owners have come to call the street after repeated vandalism. She says she has had to protect her staff and business in a number of ways, and she thinks the city could do more to understand the concerns from business owners and address growing problems. Jason Aebig, the CEO of Greater Saskatoon Chamber of Commerce, agrees. His team recently organized a survey of 263 businesses from across Saskatoon, which found security costs, property damage, and frequent encounters with vulnerable populations are on the rise – and it's affecting their bottom lines. 'We've talked for some time about the invisible costs that's borne by our local business community -- just regular small and mid-sized companies that are also dealing with the impact of this challenge and in many ways are absorbing those costs into their business,' Aebig said. 'That doesn't get included as part of the calculation, and we wanted to get some better data to understand what that really looks like.' Key findings of the survey reveal that 85 per cent of businesses report increases in security costs, 58 per cent of businesses say insurance premiums have increased, and 25 per cent of businesses experience 'incidents associated with vulnerable populations on a weekly or more frequent basis.' Aebig says these issues are also persisting in more places than ever with areas like Stonebridge reporting vandalism and interactions with homeless people affecting business operations. 'We are hearing from businesses in suburban centers that are now dealing with similar challenges to what we've traditionally heard downtown,' he said. Seven Sundays Seven Sundays had its front window smashed earlier this spring. (Submitted/Taylor Cross) According to Aebig, not only are more businesses investing more money into training staff or hiring external security to manage and communicate with someone experiencing a mental health challenge or episode of psychosis, but they're also not reporting crimes to police altogether. 'They are not engaging police in these cases because they feel that the response will be slow or completely non-existent,' Aebig said. 'So, they're absorbing 100 per cent of the costs for repairs, vandalism and other challenges.' Cross says the broken window will cost her roughly $1,000 with the downtown business improvement district reimbursing a percentage. She says the broken window is a small concern in the grand scheme of the challenges plaguing Saskatoon. But she wants to see some of the concerns highlighted in the survey addressed and prioritized accordingly. 'It's affecting all of the businesses that are trying to contribute to our local economy and build our city up,' she said. The chamber has written a letter to councillors and Mayor Cynthia Block. He says the city could look at other jurisdictions and explore a municipal grant to help businesses recoup some of its costs and help businesses like Seven Sundays thrive. 'I don't have the ability to change things, but the people that do, they need to do something about it,' Cross said.
