The market stamped its verdict on Dolby Laboratories first. The stock jumped 13.6% to US$58.81, a sharp rerating for a company that had been grinding sideways in recent months. Only after that move do the earnings themselves come into focus. Dolby posted Q3 revenue of about US$305m with basic earnings per share a little above US$0.30, while reaffirming a full year revenue outlook of US$1.41b to US$1.44b and non GAAP earnings guidance in the mid US$4 range.

The real story for you is not whether Dolby cleared some arbitrary quarterly bar. It is whether a 13% one day jump properly prices a business that still carries high margins, is leaning into content and usage based licensing, and is putting meaningful cash into buybacks and a higher…