Block has made a major strategic shift by announcing plans to cut 4,000 jobs, almost 40% of its 10,000 employees, due to rapid improvements in artificial intelligence productivity.
CEO Jack Dorsey framed the move not as a reaction to financial distress, but as a proactive recalibration around intelligence-driven operations. In a letter to shareholders, Dorsey emphasized that “intelligence tools have changed what it means to build and run a company,” arguing that smaller teams equipped with AI can execute faster and more effectively.
The market reacted quickly: Block’s shares jumped more than 20% in pre-market trading, indicating investors trust the company’s plan to boost profits through this restructuring.
Block, which owns Square and Cash App, has been adding AI to its workflows for years. During the earnings call, executives said several AI projects are nearly complete, while others are still in development.
The company reported fourth-quarter revenue of $6.25 billion, surpassing Wall Street expectations. Dorsey made it clear that the workforce reduction is not about stabilizing a struggling balance sheet, but about aligning headcount with a new technological baseline.
He explained the choice was simple: either make slow cuts over time or act quickly. Dorsey said repeated layoffs hurt morale and trust among employees, customers, and shareholders. The company chose to act fast.
Block’s announcement comes as more evidence shows AI is changing labor markets. Financial groups warn that faster AI adoption could increase unemployment soon, and studies suggest automation could already be replacing many US jobs.
The technology sector has been particularly exposed. Companies such as Salesforce have also executed substantial workforce reductions, with leadership openly acknowledging efficiency gains from AI.
What sets Block apart is how clearly it says this isn’t just small improvements. It’s a major AI-powered productivity redesign.
Inside the company, the change seems complicated. Reports indicate morale declined following earlier layoffs, and employees report feeling more pressure to use generative AI tools. Block’s regulatory filings also warn of operational and cybersecurity risks related to its AI plans, noting that these tools might not perform as expected or deliver the promised benefits.
The company has effectively placed a strategic bet: that proactive intelligence tools will scale capability faster than headcount reductions diminish resilience.
Industry experts say Block is one of the first big, clear examples of AI changing how companies design their workforces. Many firms have recently cut staff, but few have openly said it’s because AI is changing productivity economics.
For Block, the thesis is clear: compounding AI capabilities allows leaner teams to deliver stronger output. Investors appear aligned, for now.
The next few quarters will show if this change leads to lasting profit growth and strong operations. One thing is clear: Block has moved past experimenting. AI isn’t just a tool anymore; it’s becoming the foundation of the company.
