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He never made a movie, but Hollywood made him a billionaire
It’s a Hollywood story that reads more like fiction.
It’s about a billionaire who got rich from the movies in a most unusual way.
He never starred in a movie. Never directed one. Never wrote a screenplay, ran a production studio, or produced a single motion picture.
But he changed the industry forever by inventing a technology to make every movie better.
You almost certainly know Ray Dolby’s last name, but you probably don’t know his story.
In the 1960s, recorded sound had a problem. The tape used for film audio recordings produced an annoying background hiss that studios struggled to eliminate.
Dolby, an electrical engineer and physicist, developed a technology that dramatically reduced that noise. But then he turned his attention to movie theaters.
His company helped introduce the immersive surround sound that made audiences feel as if an explosion, spaceship, or speeding car had passed directly through the theater.
Dolby Surround Sound transformed moviemaking.
Credit: Eva Gattuso
Ten years after its introduction, approximately 6,000 theaters worldwide had installed the technology.
Ray Dolby wasn’t a filmmaker. But the people who did make them needed what his company supplied.
That made Dolby a billionaire. It also made his name so closely associated with movies that the theater that hosts the Academy Awards is now called the Dolby Theatre.
It’s a valuable reminder:
You don’t always have to create the finished product to profit from its success.
Sometimes, the better opportunity is supplying one indispensable piece that the finished product cannot exist without.
That may be especially important as Elon Musk prepares for what could be his most ambitious undertaking yet.
The AI Supplier Pipeline
Regular Digest readers know that our technology investing expert, Luke Lango, is still bullish on everything AI. But that doesn’t mean just investing in the big names everyone already knows.
In an April issue of Innovation Investor, Luke recommended a smaller company that provides a critical part of the infrastructure needed to make AI happen.
It’s important to remember that even technology megatrends sometimes need physical work done – work that involves heavy machinery and guys with hard hats. That’s why Luke recommended Dycom Industries (DY).
Here is Luke describing why DY is a critical part of the AI story.
Dycom is the dominant player in the design, installation, and maintenance of telecommunications infrastructure across the United States. When AT&T decides it needs to densify its fiber network in the Southeast, it calls Dycom. When Verizon needs to extend fiber-to-the-home buildout in the mid-Atlantic, it calls Dycom. When a hyperscaler needs dedicated fiber routes between data center campuses, it calls Dycom.
The AI connection is direct and mathematically unavoidable. Every ChatGPT query traverses physical fiber. Every AI-generated image, every real-time language model inference call, every agentic AI workflow that executes a multi-step task — all of it requires low-latency, high-bandwidth connectivity between data centers, edge compute nodes, and end users.
DY is a perfect illustration of a company most people don’t know, yet it remains critical to the ambitions of the AI hyperscalers we all know.
The stock was caught in the same meltdown as other AI stocks in July, but since Luke’s April recommendation, it has risen about 12%.
As I write, DY trades around $400, well below Luke’s $500 buy-below price, so there is plenty of room to establish a position in this pick.
Now, Luke has identified three more under-the-radar suppliers that could provide the infrastructure, equipment, and materials for Elon Musk’s most ambitious project yet.
Elon’s Next Big Project
This opportunity could be much bigger than anything else we’ve seen in the AI megatrend.
Luke believes Musk is preparing to unite the capabilities of Tesla (TSLA), SpaceX (SPCX), xAI, and X around a single sweeping vision.
Part of that vision includes building enormous AI data centers in space… constructing a 100-million-square-foot semiconductor complex in Texas… and deploying armies of Optimus robots to automate much of the work.
It’s an ambitious project that seems to dwarf everything Musk has done so far.
Even attempting all these projects would require extraordinary amounts of specialized aerospace hardware, semiconductor-manufacturing equipment, rare earth elements, and powerful permanent magnets.
Musk’s companies cannot immediately produce all those components themselves.
They will need suppliers.
And much like Ray Dolby’s company, some of those suppliers could become enormously valuable without ever receiving top billing.
That’s where Luke is looking.
In a new presentation, he reveals three companies he believes could become indispensable to Musk’s plans. Most investors have probably never heard of these companies, but that is precisely the point.
By the time a supplier’s name appears in the headlines alongside Tesla or SpaceX, much of the opportunity may already be priced into its shares.
Luke wants to help you learn their names before that happens.
That’s why he recently recorded a special presentation explaining Musk’s plan, the enormous supplier pipeline it could create, and the three little-known companies he believes are best positioned to benefit.
Dycom’s recent rise shows why it can pay to look beyond the famous company receiving all the headline attention and identify the specialists supplying the technology it cannot operate without.
Ray Dolby never made a movie. He simply provided the sound that every great movie needs.
Luke believes these three companies could occupy a similar position in Elon Musk’s next blockbuster.
Enjoy your weekend,
Luis Hernandez
Editor in Chief, InvestorPlace
