Block Fires 40% of Staff, Declares 'AI Has Replaced Humans'

The Day AI Got Its Pink Slip Power

10,000 employees down to 6,000. When Block announced it was slashing 40% of its workforce in one fell swoop, CEO Jack Dorsey didn't mince words about the reason: "Intelligence tools have fundamentally changed what it means to build and run a company."

This wasn't your typical corporate restructuring announcement. Dorsey was declaring that the age of AI replacing human workers had officially arrived—and the rest of corporate America would follow within a year.

"Our business is strong," Dorsey wrote on X. "Gross profit continues to grow, we continue to serve more and more customers, and profitability is improving. But something has changed."

Wall Street's AI Celebration

Investors didn't need a second invitation. Block's stock jumped 25% in extended trading, though Friday's close tempered the gains to 17%. The market's message was clear: AI-driven layoffs equal higher profits.

Morgan Stanley upgraded Block to overweight, praising "AI-driven efficiencies" that should boost profitability. Goldman Sachs raised its price target, noting the cuts would vault Block from middle-of-the-pack to near the top in fintech workforce productivity. Wells Fargo kept its buy rating, calling the quarter "chock full of positive surprise."

The human cost? Block expects to take a $450-500 million restructuring hit, front-loaded in Q1, with most cuts completed by mid-year. Dorsey chose shock therapy over gradual reduction: "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 New Math of Human Worth

Block is now targeting over $2 million in gross profit per employee—roughly quadruple pre-COVID levels. Goldman noted the cuts appear concentrated in engineering roles rather than revenue-generating positions, consistent with Block's in-house AI platform "Goose" replacing that work.

Autodesk CEO Andrew Anagnost echoed the sentiment Friday: "Revenue per employee is the defining efficiency metric for management teams. We are absolutely looking at efficiency moving forward. We are going to hire less people at Autodesk because of efficiency."

This dwarfs recent AI-linked cuts at Pinterest, CrowdStrike, and Chegg, landing as Wall Street debates whether AI job displacement is real disruption or convenient cover for cost-cutting.

The Skeptics' Case

Not everyone's buying Dorsey's AI revolution narrative. Block ballooned from 4,000 employees in 2019 to nearly 13,000 during the pandemic—facts cited by skeptics across social media. The current cuts effectively return headcount to 2020 levels.

Dorsey acknowledged the pandemic overhiring on X, calling it a mistake he corrected in mid-2024. Ironically, he previously went on a hiring spree at Twitter, which Elon Musk later slashed by 80% after his 2022 acquisition.

Piper Sandler analysts weren't impressed, reiterating their underweight rating and noting transaction losses increased to 18% of gross profit from 14% the prior quarter and 11% a year earlier. "While the right sizing is being well received by investors and should boost short-term profitability, it seems like an extreme step, and we remain skeptical of Block's longer-term growth profile."