• If you are wondering whether Tempus AI's current share price offers good value or not, the key is to look past the headlines and focus on what different valuation tools are really saying about the stock.
• Over the past week the share price return sits at a 2.8% decline, while the 30 day return is 10.6% and the year to date return is a 19.8% decline. This may leave you questioning whether the recent swings signal changing growth expectations or shifting risk appetite.
• Recent coverage around Tempus AI has focused on its role in healthcare related artificial intelligence and the broader interest this area attracts from both public markets and private capital. This backdrop helps frame why the stock can experience sharp short term moves as sentiment responds quickly to sector headlines.
• Tempus AI currently has a value score of 2 out of 6. The rest of this article will look at what different valuation methods imply about that score and finish by highlighting a more complete way to think about valuation that goes beyond a single metric.

Tempus AI scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Tempus AI Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model takes estimates of the cash a company could generate in the future and discounts those cash flows back to today, aiming to arrive at an intrinsic value per share.

For Tempus AI, the model used is a 2 Stage Free Cash Flow to Equity approach based on cash flow projections. The latest twelve month free cash flow is a loss of $257.7 million, so the story here is about what the company might generate over time rather than what it is producing today.

Analysts and extrapolated estimates suggest free cash flow moving from forecast levels in 2026 through to a projected $537.7 million by 2030. Simply Wall St provides explicit projections each year out to 2035, with later years extrapolated beyond the analyst window.

When those projected cash flows are discounted back, the model outputs an estimated fair value of $102.50 per share. Compared with the current share price, this implies a 51.2% discount, which indicates Tempus AI is trading well below this DCF estimate.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Tempus AI is undervalued by 51.2%. Track this in your watchlist or portfolio, or discover 53 more high quality undervalued stocks.

Approach 2: Tempus AI Price vs Sales (P/S)

For companies where earnings are not yet positive or are still volatile, the P/S ratio is often more useful than P/E because it compares the share price to revenue rather than profits that can be distorted by investment phase spending.

In general, higher growth expectations and lower perceived risk tend to support a higher "normal" P/S multiple, while slower growth or higher risk typically align with a lower multiple. Tempus AI currently trades on a P/S ratio of 7.05x. This sits above the Life Sciences industry average of 3.17x and above the peer average of 3.55x.

Simply Wall St's Fair Ratio for Tempus AI is 6.84x. This is a proprietary estimate of what the P/S multiple could reasonably be given factors such as earnings growth, industry, profit margin, market cap and key risks. It can be more tailored than a simple comparison with peers or the broad industry because those benchmarks do not always reflect company specific growth and risk drivers. When comparing the Fair Ratio of 6.84x with the current 7.05x, the gap is small, which suggests Tempus AI is priced close to this Fair Ratio estimate.

Result: ABOUT RIGHT

P/S ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 18 top founder-led companies.

Upgrade Your Decision Making: Choose your Tempus AI Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Think of a Narrative as your own written story for Tempus AI that links what you believe about its oncology testing volumes, AI data partnerships and margin potential to a set of numbers for future revenue, earnings and profit margins. It then turns that into a Fair Value you can compare with the current price on Simply Wall St's Community page. Narratives are easy to create, are updated as new earnings or partnership news arrives, and can differ widely. For example, one investor might lean toward a Fair Value closer to US$35 based on the more cautious view around reimbursement and competition, while another might lean toward US$100 based on confidence in data monetization and AI adoption. Those two Narratives give clear but different signals about whether the current price of around US$52 to US$53 looks high or low against their own assumptions.

Do you think there's more to the story for Tempus AI? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.