Dolby Laboratories, Inc. DLB recently deepened its collaboration with AMC Entertainment AMC. After a decade of success and strong guest demand, the two entertainment bigshots plan to expand by adding 40 more Dolby Cinema locations at AMC theaters across the United States by the end of 2027. This roughly 25% increase will bring the total number of Dolby Cinema at AMC auditoriums to more than 200 locations nationwide.

Dolby Cinema is DLB's premier theatrical solution, designed for both exhibitors and moviegoers. It creates a fully immersive environment featuring Dolby Vision's ultra-vivid picture quality and Dolby Atmos' immersive sound, offering audiences a truly captivating movie experience. Through this initiative, both AMC and Dolby reaffirm their commitment to maintaining and expanding the existing Dolby Cinema network.

AMC’s decision to expand its Dolby Cinema locations aligns with its strategy to enhance its premium offerings. By selecting Dolby Vision as its HDR standard, AMC ensures that audiences get to enjoy the best possible visual experience at Dolby Cinema. This further solidifies Dolby’s footprint in the rapidly evolving consumer discretionary market.

DLB Shapes the Future of Movie Experience

The strategy to expand Dolby Cinema at AMC comes as the industry shifts toward premium formats. Audiences are increasingly choosing higher-quality viewing experiences over standard formats. In 2024, Dolby Cinema achieved its strongest box office performance in history, surpassing record-breaking revenues in 2023. Over the past five years, 49 out of the top 50 films were presented in Dolby Cinema, highlighting its popularity and effectiveness in attracting audiences.

One of the key drivers of Dolby Cinema’s success is its robust content pipeline. With more than 725 theatrical features released or confirmed in Dolby Vision and Dolby Atmos, movie enthusiasts can expect a continuous stream of premium content. Some of the most anticipated upcoming films in Dolby Cinema include Mission: Impossible – The Final Reckoning, Karate Kid: Legends, F1, Jurassic World Rebirth, Avatar: Fire and Ash, among others. With a strong lineup, Dolby Cinema is set to deliver immersive theatrical experiences.

As Dolby and AMC continue their collaboration, advancements in visual and audio technology are likely to further enhance the Dolby Cinema experience.

Dolby Atmos Expansion Fuels DLB's Growth Potential

The introduction of Dolby Atmos in Cadillac vehicles highlights a broader industry trend where top artists are now embracing Dolby Atmos for music production. According to Billboard's 2024 Top 100 Artists, 93% of artists are now releasing music in Dolby Atmos, allowing listeners to experience their favorite songs like never before. The rising adoption of Dolby Atmos is driving the company's top-line momentum.

Management highlighted that nearly 80% of the domestic box office and almost 70% of the global box office titles were released in Dolby Atmos and Dolby Vision formats in 2024.  It announced partnerships with more than 20 original equipment manufacturers (OEMs), which now have over 60 models in the market with Dolby Atmos. Several partners are expanding Dolby Atmos deeper into their product lineups, which bodes well for DLB.

For fiscal 2025, the company expects Dolby Atmos and Dolby Vision, along with imaging patents, to grow around 15%.

DLB’s Zacks Rank & Stock Price Performance

DLB currently carries a Zacks Rank #2 (Buy). Shares of the company have lost 3.7% in the past year compared with the Zacks Audio Video Production industry's decline of 15.7%.

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Other Stocks to Consider

Some other top-ranked stocks from the broader technology space are InterDigital, Inc. IDCC and Arista Networks, Inc. ANET. IDCC presently sports a Zacks Rank #1 (Strong Buy), while ANET carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

IDCC is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks. It has a long-term growth expectation of 15%.

Arista delivered a trailing four-quarter average earnings surprise of 12.87%. It has a long-term growth expectation of 14.41%. It supplies products to a prestigious set of customers, including Fortune 500 global companies in markets such as cloud titans, enterprises, financials and specialty cloud service providers.

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This article originally published on Zacks Investment Research (zacks.com).

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