On May 28, Tempus AI (TEM) stock plunged as the market reacted to a damning report from short seller Spruce Point Capital. One day later, the company responded to the accusations against it.
A company at the intersection of healthcare and artificial intelligence (AI), Tempus began trading on the Nasdaq in June 2024, a year that didn’t see too many high-profile initial public offerings (IPOs). For that reason, Tempus stood out, and investors were hungry for new AI stocks to buy.
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While trading has been fairly volatile, TEM stock has mostly risen and is currently up 35% for the year. Since 2025 began, its performance has been quite strong, with year-to-date (YTD) gains of almost 60%.
The damning short report from Spruce Point Capital pushed shares down this week, although TEM stock has since recovered. Tempus took the opportunity to respond to short sellers’ claims and offer its own take on the allegations.
Tempus AI and CEO Eric Lefkofsky have been targeted by a scathing short report by Spruce Point Capital.
Image source: Big Event Media/Getty Images
Spruce Point raises concerns regarding Tempus’s AI
Since its founding in 2009, Spruce Point Capital has released over 100 forensic short reports, laying out cases against companies across various industries. In April 2025, it revealed short positions in travel tech company Clear Secure and popular beverage producer Monster Energy.
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Most recently, though, it published a detailed short report that revealed a bet against Tempus stock. In it, the short-seller estimated that TEM stock posed a “50%-60% potential long-term downside and market underperformance risk” for investors, primarily due to concerns regarding its leadership and AI capabilities.
For context, Tempus uses AI to improve precision medicine solutions, as well as drug discovery and diagnostics. Its operating system is reported to analyze medical information and make it accessible for patients, as well as doctors and scientific researchers.
However, Spruce Point’s researchers make it clear in the report that they harbor grave concerns about the AI hype surrounding TEM stock, suggesting that it may be significantly overblown.
“Our concerns about the Company’s AI capabilities deepened after we evaluated split-second product demonstrations from promotional videos and screenshots from the Company’s website,” the report states. “Apparently, Tempus has not properly figured out how to leverage AI to cross reference and check even basic facts such as patient age and the sequencing order of samples and deliveries.”
The short seller also discusses Tempus founder and CEO Eric Lefkofsky, highlighting comparisons he has drawn to his company and market leaders such as Tesla and Nvidia.
“He suggests that Tempus is likely to reach a similar inflection point, and that vast upside is around the corner. However, 10 years since being founded in 2015, there is no evidence that Tempus has generated a profit or net positive cash flow,” Spruce Point notes.
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The report raises the point that after a decade of operation, both Tesla and Nvidia had posted $2 billion in revenue and achieved at least one cash flow positive year. It notes that in 2024, only $12.4 million, roughly 2% of Tempus’s yearly revenue, came from AI applications.
Tempus responds to Spruce Point’s allegations
The underlying theme of the Spruce Point short report seems to be that it believes Tempus’s AI hype is overblown and poses a massive risk for investors. For that reason, TEM stock earns a Strong Sell Opinion from the firm.
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Not all companies respond after being targeted by a short seller, but on May 29, Tempus issued a statement on X, addressing the report. The company described Spruce Point’s claims as inaccurate and misleading, encouraging investors to do their own research.
“We do not intend to respond through the media to a report that is riddled with inaccuracies, conjecture, and ill-informed hypotheticals,” the health care company stated. “It also fails to address Tempus’ history of strong financial performance and impressive growth.”
Tempus also took its argument a step further, claiming that the last five stocks targeted by Spruce Point are up “on average, over 20% in the past 4 months.” The company added that it stands by its results and remains committed to helping health care professionals leverage AI for the benefit of patients.
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