Refusing to slow down since the start of the new year, shares of Tempus AI (TEM +0.96%) have skyrocketed nearly 99% since Jan. 1. In light of the artificial intelligence (AI) stock's strong performance so far this year, prospective investors may fear there's not much share price growth potential left for Tempus, an innovator in applying AI solutions to the healthcare industry.
But this bearish conclusion fails to properly acknowledge that there's plenty of fuel left in the tank which could help to propel Tempus stock even higher in the months and years to come.
NASDAQ: TEM
Key Data Points
This acquisition is merely one step that can power Tempus AI stock higher
While Tempus AI's rise is impressive, it's foolhardy to conclude that the potential for further growth has evaporated. The company recently completed its acquisition of Ambry Genetics, providing Tempus AI with the ability to offer patients more comprehensive cancer screening with Ambry's hereditary cancer assay. Additionally, Tempus AI now has the ability to expand into other healthcare areas after acquiring Ambry, including pediatrics, reproductive health, and immunology.
It's still the early innings for Tempus AI, and the company is already gaining recognition for its sophisticated AI offerings. In 2023, for example, the company reported 125% net revenue retention, illustrating how customers have been motivated to deepen their relationships with Tempus AI -- a clearly auspicious sign.
Management projects 2024 revenue -- absent of Ambry's contribution -- of $700 million and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of negative $105 million, which includes the contribution of sales from Ambry. Should the company achieve these projections, it will represent year-over-year sales growth of 32% and an EBITDA improvement of over $50 million from 2023.
This high-risk stock could provide growth investors with high rewards
There's still plenty of time for growth investors to click the buy button on Tempus AI stock; however, it's critical to recognize the road ahead may be rocky. Therefore, only those comfortable with an investment with a higher degree of risk should consider positions at this time.
