Tempus AI (Nasdaq: TEM), which sells cancer genetic tests and licenses clinical and molecular data to drug makers, is a short for Deep Sail Capital (@DeepSailCapital), a long/short fund manager. On September 28, 2026, the day Tempus AI announced FDA clearance for its fourth ECG-AI product, he wrote that the revenue is far off and uncertain, and on October 12 he said he had shorted a basket of genetic-data stocks that includes Tempus AI. Tempus AI fell about 20%, from $85.01 on September 25 to $68.22 on October 13, 2026, ahead of third-quarter results and the pending Personalis deal.
This is journalism and commentary, not investment advice. We hold no position unless stated.
Key facts
- Ticker and exchange: Tempus AI, Inc., TEM, Nasdaq.
- Situation type: Thematic short on a richly valued AI-diagnostics company after a news-driven run.
- The call: Deep Sail Capital is short, with a bearish post on September 28, 2026 and a basket short disclosed on October 12, 2026.
- Second quarter 2026: Revenue rose 22% to $382.5 million; net income of $5.6 million included $98.5 million of unrealized gains, and the operating loss was $75.9 million.
- Guidance: 2026 revenue of $1.595 billion to $1.605 billion and adjusted EBITDA of about $65 million.
- Valuation: About 179.9 million weighted shares at $68.22 is roughly $12.3 billion, or about 7.7 times guided 2026 revenue, as of October 13, 2026.
- Main risk to the short: Growth of 22% or more, a pending Personalis acquisition and analyst upgrades.
Is TEM a good bet right now?
So far the short is working. Tempus AI is down 19.8% from the last close before his first post, while the S&P 500 rose 0.8%, about 20.6 points in his favor by our math. That result is provisional and does not count on our scoreboard until 180 days.
The longer argument is about earnings quality. Tempus AI used $80.8 million of cash in operations in the first half of 2026, mostly in the first quarter, and its June 30 balance sheet showed $1.17 billion of convertible senior notes against $820.7 million of cash and marketable securities.
Why are investors bearish on Tempus AI?
- Paper gains. The second-quarter profit came from unrealized gains on stock holdings, not operations.
- Clearance is not revenue. An FDA 510(k) clearance lets Tempus AI sell ECG-MR, but doctors still have to use it and insurers still have to pay.
- A rich multiple. About 7.7 times revenue for a company that is not yet profitable on operations.
- Big swings. On October 6, 2026, Tempus AI ran to $87.99 early and closed at $71.98, a 13.85% drop.
Who's making this call and why?
Deep Sail Capital (@DeepSailCapital) describes itself as a long/short growth-at-a-reasonable-price fund and has about 57,360 followers on X. On September 28, 2026, he wrote that Tempus AI was being pumped on the FDA news, "but the revenue is far off and unsure if it materialises." On October 12, he replied, "I put on an industry short of genetic data companies early last week, $TEM, $CDNA, $DNA, and $ABSI".
Track record. In our tracking, Deep Sail Capital is 13-12 (a .520 win rate) on 25 calls scored at 180 days against the S&P 500, with an average edge of +8.94 percentage points, ranking 4th all time. His shorts are 9-4, though his last 10 scored calls went 2-8. See the scoreboard.
Other supporters:
- Tony (@TonyJZhou), who writes about AI stocks from filings, pointed out that the second-quarter profit rested on unrealized gains and wrote, "The gap is mark-to-market, not medicine."
- Audit The Herd (@AuditTheHerd), a CPA in corporate finance, welcomed the clearance but noted, "It isn't the same as doctors using it and insurers paying for it, yet."
Who disagrees?
- Mindreader Biotech (@MindreaderBio), which says it is run by a PhD and MD, wrote, "think Personalis could be a huge deal for Tempus." Tempus AI agreed to buy Personalis, a cancer monitoring test maker, at about $1.5 billion of enterprise value.
- The growth numbers. Oncology test volume grew 31% in the second quarter, and data-licensing revenue grew 36%.
- The selloff may be overdone. Patient Investor (@PSInvestor) said he could find no filing, offering or FDA setback behind the October 6 drop, writing that Tempus AI "sold off all day to close at $71.98."
- Cash burn is shrinking. Operating cash use fell to $7.5 million in the second quarter from $73.3 million in the first, and management expects positive cash flow in the fourth quarter of 2026, per its shareholder letter.
- Reimbursement tailwind. The same letter expects new pricing for its tissue test to add about $85 million a year starting in 2027.
What are the key facts to verify?
- Revenue, operating loss, unrealized gains, cash and convertible notes in the second-quarter 2026 results release.
- The ECG-MR clearance in Tempus AI's September 28, 2026 release.
- Third-quarter results, especially operating loss and cash burn.
- The Personalis closing terms and any new share issuance.
What would prove it right or wrong?
Signals the short is working:
- Operating losses and cash burn stay high while revenue growth slows.
- ECG-AI products show little revenue.
- New convertible debt or stock is issued.
Signals it is failing:
- Revenue beats guidance and adjusted EBITDA reaches about $65 million for 2026.
- Personalis closes and lifts growth.
- The stock regains its September highs.
This is journalism and commentary, not investment advice. We hold no position unless stated.