If you're trying to decide what to do with your Tempus AI shares or watching the fast-moving world of AI stocks for the next big winner, it's time to take a closer look. Tempus AI stock has become the focus of many investors, especially after its impressive growth this year. The price rose quickly, last closing at $92.45, a staggering jump of nearly 170% year-to-date and nearly 99% in the past 12 months. Even over the past week and month, Tempus AI has posted positive returns of 2.9% and 4.8%, hinting that the momentum has not died down.
There's more to this story than a diagram. Behind these numbers are headlines about the company's ongoing AI collaborations and expansion into new healthcare applications. This news continues to fuel investor expectations. Tempus AI evaluation is also becoming a hot topic. Screening stocks through our standard scoring system, Tempus AI currently scores a 2 out of 6 for Undervalued, meaning it only ticks two boxes where a bargain can be found. That doesn't mean there's no upside potential, but it does suggest some caution may be warranted as investors try to figure out whether future growth prospects have been fully priced in.
To understand what these scores actually mean, and to see if Tempus AI could be the next under-appreciated opportunity, it's worth exploring different scoring approaches. What's even more compelling is that there may be an even better way to evaluate the real value of Tempus AI, which we'll cover at the end of this article.
Tempus AI scored just 2/6 in our evaluation tests. See what other warning signs we've spotted in full breakdown of grades.
The discounted cash flow (DCF) model estimates a company's intrinsic value by forecasting its future cash flows and discounting them to today's dollars. This approach helps investors see what a business might actually be worth based on its expected ability to generate cash over time.
For Tempus AI, the DCF model starts with trailing 12-month free cash flow of negative US$90.1 million. Analysts provided detailed forecasts for the next few years, expecting growth from $21.1 million in 2026 to $124.9 million in 2027, before reaching $302.95 million in 2028 and $766.6 million in 2029. 2035.
After discounting all of these future cash flows back to the present, the model gives Tempus AI an estimated intrinsic value of $284.97 per share. Given the current share price of $92.45, this means the stock is undervalued by about 67.6% according to this method.
Our discounted cash flow (DCF) analysis shows that Tempus AI is undervalued by 67.6%. Keep track of this in your watch list or briefcaseor find out more undervalued shares.
For companies like Tempus AI that are still in the early stages of growth and not yet profitable, the price-to-sales (PS) multiple is a common way to estimate value. The PS ratio is especially useful for valuing businesses that have negative or unstable earnings but are rapidly growing revenues. This gives investors an idea of how much they are paying for each dollar of sales.
Growth expectations, profitability, and risk are all factors that determine what a “normal” or “fair” PS ratio should be. Companies with higher growth rates and higher profits tend to have higher multiples. Increased risks or uncertain profitability typically mean a lower fair value multiple than industry norms.
Tempus AI is currently trading at a high PS multiple of 16.87x. For comparison, the average among peers is around 4.73x, and the broader Life Sciences industry is 3.49x. Metrics like Simply Wall St's Fair Ratio go even further. Tempus AI's fair multiple is calculated at 9.63x, taking into account its sustainable projected growth, industry factors, profit margins, market capitalization and risk profile.
Fair Ratio differs from traditional peer or industry comparisons because it is specifically tailored to a company's prospects and characteristics, not just how it compares to the average competitor. This detailed approach takes into account rapidly changing dynamics such as Tempus AI's aggressive expansion and future profitability prospects.
Comparing the company's current PS ratio of 16.87x to its fair multiple of 9.63x suggests that even with the company's strengths, the stock is currently trading above what would be considered fairly valued from a sales perspective.
We mentioned earlier that there is an even better way to understand valuation, so let's introduce you to narratives. A narrative is simply the story or rationale that you personally believe defines a company's prospects, translating your expectations for Tempus AI's growth, profitability and risk into a financial forecast and ultimately a fair value per share.
While traditional metrics only give you numbers, narratives directly link those numbers to what you think will happen next, making it easy to visualize how your assumptions compare to those of the market and other investors. Narrative information is available for every company in the Simply Wall St community, where millions of investors share stories, discuss catalysts and risks, and issue forecasts that change as new news or earnings emerge.
This approach not only helps you decide whether to buy or sell by instantly comparing the fair value of each narrative to the current market price, but also allows you to track how investor sentiment and assumptions change as real information becomes available. For example, Tempus AI has currently issued forecasts ranging from an optimistic fair value of $90.0, expecting rapid adoption of genomic testing and artificial intelligence partnerships, to a more cautious forecast of $60.0, which takes more into account competition, regulatory headwinds and margin pressures.
NasdaqGS: TEM Community Fair Value as of October 2025
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only objective methodology, and our articles are not intended to provide financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or your financial situation. We strive to provide you with long-term, focused analysis based on fundamental data. Please note that our analysis may not factor in recent price-sensitive company announcements or qualitative content. Wall Street simply doesn't have a position in any of the stocks mentioned.
