Tempus AI (NASDAQ: TEM) shares experienced a rollercoaster ride on Wednesday, ultimately closing with a 5.04% gain despite facing significant headwinds earlier in the trading session. The artificial intelligence-powered precision medicine company saw its stock price plummet following a scathing short-seller report but managed to recover and surge higher by the end of the day.

The day began with Spruce Point Capital Management releasing a highly critical report on Tempus AI, expressing concerns about the company's management, AI capabilities, and financial reporting practices. The short-seller's report caused an initial sell-off, with Tempus AI shares dropping as much as 19% during intraday trading. Spruce Point raised questions about the company's revenue quality, strategic partnerships, and the credibility of its management team, projecting a potential 50-60% downside risk to Tempus AI's share price.

However, the tide turned later in the day when news broke that Cathie Wood's ARK Investment had purchased 251,000 shares of Tempus AI. This vote of confidence from a high-profile investor appears to have sparked a reversal in sentiment. The ARK Investment purchase, combined with some investors likely viewing the earlier drop as a buying opportunity, helped drive Tempus AI's stock to close with a significant gain.

The dramatic intraday reversal and overall positive performance highlight the volatile nature of stocks in the AI sector, particularly those facing short-seller scrutiny. While the Spruce Point report raised serious concerns, the market's response suggests that many investors remain bullish on Tempus AI's long-term prospects in the rapidly growing field of AI-driven precision medicine.