Overview of coverage initiation
Baird has opened formal coverage of Tempus AI Inc (NASDAQ:TEM) with an Outperform rating and established a $59.00 price target. That price goal implies approximately 14% upside from the reference share price of $51.95. The firm also applied a Speculative Risk designation to the company alongside the Outperform rating.
Market context for the stock
Tempus shares have declined by more than 7% over the past week and are trading well below their 52-week high of $104.32. Baird characterizes the recent decline in the share price as creating a buying opportunity given its view of the company’s positioning.
Business model and revenue mix
Tempus AI operates as a commercial-stage precision medicine company that pairs molecular information with artificial intelligence capabilities. The company’s Genomics segment provides the bulk of its revenue, with a concentration in oncology testing. Tempus’s Data and Services segment primarily earns revenue through licensing de-identified data to pharmaceutical and biotechnology customers.
Baird’s perspective
In its initial rating, Baird signaled that it views Tempus as having built an attractive franchise for therapy selection and taking a differentiated approach to combining data and AI. The firm’s initiation note says the combination of those capabilities and the recent stock pullback underpins its Outperform stance, while the Speculative Risk label signals elevated uncertainty inherent to the company’s profile.
Recent company disclosures and commercial milestones
Tempus disclosed preliminary, unaudited results showing a record total contract value exceeding $1.1 billion as of December 31, 2025. The company reported application revenue of roughly $316 million for the full year, a year-over-year increase of 31%. Its Insights segment, which centers on data licensing, grew at an even faster pace, rising 38% year over year.
Product and partnership developments
Following its 2025 acquisition of Paige, Tempus launched Paige Predict, an AI-driven digital pathology solution designed to infer biomarkers from H&E whole slide images. The tool is intended to support clinical decision-making in cases where tissue samples are limited.
Tempus also announced a multi-year strategic collaboration with NYU Langone Health focused on molecular profiling and data analysis. That partnership will support NYU Langone’s Center for Molecular Oncology in starting a study titled "Serial Molecular Profiling and Monitoring of Human Cancer." Separately, Tempus and Northwestern Medicine are collaborating to broaden genomic testing availability for cancer patients across Northwestern Medicine’s network.
Clinical validation
In addition to commercial and partnership news, Tempus reported clinical validation results showing that its Immune Profile Score, or IPS test, more accurately predicts patient outcomes for immunotherapy than conventional biomarkers in a recent study.
Implications
The combination of revenue growth in both application and Insights lines, a large contract backlog, product launches such as Paige Predict, and multi-year collaborations with major health systems are the facts central to Baird’s initiation. The Speculative Risk designation and the preliminary, unaudited nature of some disclosures are also core elements of the current picture.
Bottom line
Baird’s first formal coverage of Tempus pairs optimism about the company’s therapy selection franchise and data-and-AI approach with a cautious risk classification. The research house views the recent share weakness as an entry point, while the company continues to report contract and revenue momentum and to expand its AI-enabled product set and institutional collaborations.