Jack Dorsey’s Block Cuts 40% of Workforce, Declares AI Has Fundamental

When Jack Dorsey took the microphone on Block’s earnings call Thursday evening, he didn’t mince words. The company formerly known as Square was about to do something unprecedented in its history: cut nearly 40% of its workforce. And Dorsey was explicit about why. “Intelligence tools,” he told investors, have fundamentally changed what it means to build and run a company.

The announcement landed like a thunderclap across Silicon Valley. Block would slash approximately 4,000 jobs, reducing headcount from over 10,000 to just under 6,000. The stock responded immediately, jumping 25% in extended trading as investors embraced Dorsey’s vision of an AI-driven future.

“Our business is strong. Gross profit continues to grow, we continue to serve more and more customers, and profitability is improving. But something has changed.” — Jack Dorsey, Block CEO

A $500 Million Bet on AI Efficiency

The numbers are staggering. Block expects to take a $450 million to $500 million hit for restructuring costs, with the bulk of the cuts completed by mid-year. Dorsey chose to act decisively rather than phase the reductions, arguing that “repeated rounds of cuts are destructive to morale, to focus, and to the trust that customers and shareholders place in our ability to lead.”

The move dwarfs recent AI-linked cuts at Pinterest, CrowdStrike, and Chegg. It also comes as the debate over AI and jobs consumes Wall Street. Earlier this week, Citrini Research published a thought experiment titled “The 2028 Global Intelligence Crisis” — a hypothetical memo warning that AI-driven layoffs could trigger a negative feedback loop of white-collar displacement, collapsing consumer spending, and systemic financial damage.

While that report found critics, notably from Citadel Securities, Dorsey’s announcement provides a real-world case study for the argument that AI-based headcount reductions would first appear at strong, profitable software companies.

“We are absolutely looking at efficiency moving forward. We are going to hire less people at Autodesk because of efficiency. We’re certainly seeing engineering efficiency because of AI.” — Andrew Anagnost, Autodesk CEO

The Engineering Exodus

Goldman Sachs analysts noted that Block’s cuts appear concentrated in engineering roles rather than revenue-generating or regulatory positions — consistent with the company leaning on its in-house AI platform, Goose, to replace that work. Block is now aiming for north of $2 million in gross profit per head, roughly quadruple where that figure sat before the pandemic.

Morgan Stanley upgraded Block to overweight following the announcement, writing that AI-driven efficiencies should deliver increased profitability. Wells Fargo maintained its buy rating, calling the quarter “chock full of positive surprise.”

But not everyone is convinced. Skeptics on social media were quick to point out that Block ballooned from about 4,000 employees in 2019 to nearly 13,000 during the pandemic. Dorsey acknowledged the overhiring on X, calling it a mistake he corrected in mid-2024. Goldman noted that the reduction effectively takes Block’s head count back to 2020 levels.

Piper Sandler analysts reiterated their underweight rating, emphasizing that Block’s transaction losses increased to 18% of gross profit in the period from 14% in the prior quarter and 11% a year earlier. “While the right sizing is being well received by investors,” they wrote, “it seems like an extreme step, and we remain skeptical of Block’s longer term growth profile.”

A Prediction for Corporate America

Dorsey’s announcement wasn’t just about Block. It was a prediction for the rest of corporate America. He suggested that the majority of businesses will reach the same conclusion about AI-driven efficiency within a year. The message was clear: the era of AI replacing human workers isn’t coming — it’s already here.

The timing is notable. According to a Reuters tally, companies have announced more than 61,000 job cuts tied to AI, including Amazon, Meta, and other tech giants. Mark Zuckerberg recently told investors he expects “2026 to be the year that AI dramatically changes the way we work.”

Dorsey himself has been here before. When he ran Twitter, he went on a hiring spree that Elon Musk later reversed, slashing roughly 80% of the payroll within six months of buying the company in 2022. Whether Block’s AI-driven transformation proves more sustainable than Twitter’s remains to be seen.

For now, one thing is certain: Jack Dorsey has placed one of the largest bets yet on AI’s ability to replace human labor. The rest of the industry is watching to see if it pays off.

This article was reported by the ArtificialDaily editorial team. For more information, visit CNBC and Reuters.