Block Cuts Half Its Workforce: Smart AI Strategy or Reckless Gamble?

4,000 people just lost their jobs. Half of Block's workforce, gone in one announcement. The market's response? A 24% stock surge.

Welcome to the AI revolution, where efficiency trumps employment.

The AI Efficiency Bet

Jack Dorsey didn't mince words in his shareholder letter. "We're reducing Block by nearly half," he wrote, framing the decision as a strategic pivot toward "smaller, highly talented teams using AI to automate more work."

CFO Amrita Ahuja doubled down on this narrative, calling it positioning "for our next phase of long term growth." The company hit analyst expectations with $6.25 billion in revenue and 65 cents per share in adjusted earnings.

But here's the kicker: Dorsey predicts this is just the beginning. "Within the next year, I believe the majority of companies will reach the same conclusion," he said. Translation? Mass layoffs are coming to Silicon Valley.

The Numbers Game

Block expects to spend $450-500 million on this restructuring – mostly severance and benefits. That's a hefty upfront cost for long-term savings. The company projects $3.66 earnings per share for 2026, beating analyst estimates of $3.22.

Investors clearly bought the story. But what about the 10,205 employees who started 2026 with jobs, and the 4,000+ who won't finish it with them?

The Domino Effect Question

Dorsey's prediction about other companies following suit isn't just corporate posturing – it's a warning. If Block's bet pays off, expect a wave of "AI-driven efficiency" announcements across tech.

The company chose to "act now" rather than drag out layoffs over months or years. Dorsey argued that "repeated rounds of cuts are destructive to morale." Fair point, but so is cutting half your workforce in one fell swoop.

Are we witnessing smart adaptation or reckless abandonment of corporate responsibility?