Investing in quality artificial intelligence (AI) stocks and holding them in a Tax-Free Savings Account (TFSA) is a solid strategy to generate tax-free returns over the next decade. The global AI market is projected to grow from US$244 billion in 2025 to over US$1 trillion by 2031, representing an annual growth rate of nearly 27%.
A rapidly expanding addressable market presents an opportunity for multiple companies to gain traction and grow their revenue and earnings over time. One such beaten-down tech stock is Tempus AI (NASDAQ:TEM).
The TFSA contribution limit for 2025 has increased to $7,000, bringing the maximum cumulative contribution room to $102,000. Let’s see why you could invest $7,000 in TEM stock right now.
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Is Tempus AI stock a good buy?
Valued at US$10.5 billion by market cap, Tempus AI is a healthcare technology company providing next-generation sequencing diagnostics and molecular testing to healthcare providers and pharmaceutical companies. It offers data insights, clinical trial matching, algorithmic oncology tests, and research platforms.
In the first quarter (Q1), Tempus AI reported revenue of US$256 million, representing a 75.4% year-over-year increase. The record quarter for the AI-powered healthcare company was driven by genomics revenue, which grew by 89% to US$194 million, and data services revenue, which rose 43% to US$62 million. Management raised full-year 2025 guidance to US$1.25 billion, indicating a year-over-year growth of 80%.
Tempus AI announced a US$200 million, three-year agreement with AstraZeneca and Pathos AI to build the world’s largest foundation model in oncology. This deal brings Tempus’s total remaining contract value above US$1 billion for the first time, providing visibility into revenue.
The partnership leverages over 300 petabytes of multimodal data connected to patient outcomes, with the first model version expected within nine to 12 months. Importantly, the agreement is non-exclusive, enabling Tempus to pursue similar partnerships with other pharmaceutical companies.
Tempus demonstrated impressive operational efficiency with gross profit increasing 99.8% year-over-year to US$155.2 million. Its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) loss improved by US$27.8 million to US$16.2 million, showing clear progress toward profitability.
Tempus AI anticipates achieving a positive adjusted EBITDA in 2025. Both business segments contributed to growth: oncology testing volumes grew 20%, while hereditary testing (Ambry Genetics) surpassed expectations with 23% unit growth, exceeding the original mid- to high-teens expectations.
Tempus continues to build its comprehensive healthcare AI platform, with over 4,000 provider connections and data from 40 million patients. The acquisition of Deep 6 enhances clinical trial matching capabilities, while Tempus advances its minimal residual disease (MRD) portfolio through both tumour-naive and tumour-informed assays.
With relationships spanning 19 of the top 20 oncology pharmaceutical companies, Tempus is well-positioned to capitalize on the AI healthcare transformation.
Is TEM AI stock undervalued?
Analysts expect Tempus AI to increase revenue from US$693.4 million in 2024 to US$2.61 billion in 2029. Comparatively, adjusted earnings per share are forecast to grow to US$1.69 in 2029, compared to a loss of US$1.58 in 2024.
If TEM AI stock is priced at 60 times forward earnings, it will trade around US$100 in early 2029, indicating an upside potential of almost 70% from current levels.
Tempus AI stock offers a combination of accelerating revenue growth, improving profitability metrics, and transformational partnerships, which position it as a leader in AI-driven precision medicine.
The AstraZeneca deal validates the company’s data strategy while creating a potential blueprint for additional pharmaceutical partnerships. As healthcare increasingly adopts AI solutions, Tempus’s comprehensive platform and unmatched data assets provide significant competitive advantages for sustained growth.
