This AI Health Stock is Up Over 150% This Year—and It’s Not Slowing Down

Tempus AI (NASDAQ:TEM | TEM Price Prediction) isn’t an AI stock that immediately comes to mind when one thinks of machine-learning-driven technological innovators with disruptive potential. Undoubtedly, the AI revolution has made a lot of investors a lot of money, but beyond generative AI are some even more profound technologies that could take investor euphoria to the next level. Of course, it’s always smart to gauge for bubbliness whenever there’s a new technological theme that’s powering markets. And though there will probably be a bubble at some point, I’m not sure we’re there yet, especially given ChatGPT maker OpenAI isn’t even public yet.

In any case, I think some of the most game-changing AI innovations will be in health. Undoubtedly, consider what’s at stake and what humanity stands to gain as AI models tackle some of the toughest problems in medicine. Though health and biotech are difficult fields to invest in, I do think that investors looking for more applied AI rather than generic generative AI may wish to look at health AI plays such as Tempus AI.

Some big names have positions in Tempus AI

At this juncture, the relatively small $15 billion company has some big-name investors behind it, including the likes of Ark Invest’s Cathie Wood, as well as Congresswoman Nancy Pelosi, who picked up a considerable amount of shares at the start of the year. While following the smart money into the choppy, high-growth mid-cap stocks may be met with mixed results, I must say that Tempus AI is an exciting name that’s shown early glimmers of potential.

Of course, investing in such hyper-growth companies entails taking on more risk, but if you’re a believer that we’re shifting hype from large language model (LLM) makers and AI infrastructure companies (where the puck is currently at right now) and towards applied AI as models become better tailored for specific use cases, Tempus AI stock is a name for the top of your radar.

Tempus AI stock has dipped of late. It might be an opportunity to start doing some buying

Tempus AI stock has been on the descent in recent weeks, now down close to 17% from its recent all-time high. The latest correction in shares of the AI-driven precision medicine company might have more to do with the red-hot run and the hefty valuation than anything else. With strong adoption of the technology and the opportunity to double down on strategic partnerships across the industry, I do view the name as one of the best innovators in all of the life sciences space right now.

So, while others focus on GLP-1 drug makers, I’d be more inclined to give the AI-first names more of a closer look. Sure, it’s uncertain when adoption of Tempus AI’s impressive tools will hit that big inflection point. Either way, I think the 40.1 times trailing price-to-earnings (P/E) multiple is actually reasonable, given the market opportunity and how quickly Tempus’ product stands to advance further.

As always, such AI tools may take time for the masses to adopt, but once word gets out, I do think it’ll be tough to stop a boom. With the company hiking its guidance for the full year after posting a pretty solid second quarter, I think Tempus AI is a name that’s firing on all cylinders and is a pick-up after a correction, which, I think, is a bit of an overreaction. Management remarked on its robust sales and margin growth, which are growing faster than expected. I think there’s more in the way of surprises for the up-and-coming AI health innovator.

Sure, the latest correction may be concerning to some, but the business itself is showing no signs of slowing down.