Jack Dorsey Cut Half of Block’s Workforce and Wall Street Threw a Party
Jack Dorsey just laid off half his company in a single post. Four thousand people gone. Not because Block is struggling, quite the opposite. Fourth-quarter gross profit jumped 24 percent year over year to $2.87 billion. Cash App surged 33 percent. Earnings beat estimates. The company raised its full-year 2026 guidance to $12.2 billion in gross profit. Block is firing on all cylinders and it just told half its workforce they’re no longer needed.
The reason, stated without corporate euphemism, is artificial intelligence. “We’re already seeing that the intelligence tools we’re creating and using, paired with smaller and flatter teams, are enabling a new way of working which fundamentally changes what it means to build and run a company,” Dorsey wrote. “And that’s accelerating rapidly.” The stock surged more than 24 percent in after-hours trading. Four thousand careers ended, and investors added billions to Block’s valuation in hours. If that doesn’t stop you cold, you’re not paying close enough attention.
The first domino
Companies have been invoking A.I. as justification for layoffs for two years. Look at Pinterest, CrowdStrike, Chegg, Salesforce, Amazon. In most cases, A.I. was a convenient narrative dressing up post-pandemic headcount corrections. Block is different. This is probably the first legitimate mass layoff driven by A.I. as the actual operating thesis. Dorsey said explicitly that this isn’t happening because Block is in trouble. It’s happening because he believes a smaller team, augmented by intelligence tools, can do more and do it better. He pointed to a step-change in model capabilities in December 2025 that surpassed even Block’s own internal tool, Goose. “Something happened in December last year where the models just got an order of magnitude more capable,” he said.
Dorsey was explicit about why he chose a single massive reduction rather than a slow bleed. Repeated rounds of cuts, he argued, destroy morale, erode trust and leave companies in permanent organizational anxiety. He’d rather absorb the shock once, reset and rebuild. The severance is generous, with 20 weeks of base salary plus tenure bonuses, equity vested through May, six months of healthcare and an additional $5,000. But generosity in severance doesn’t change the underlying reality. This is a CEO telling the world that A.I. made 4,000 knowledge workers unnecessary. Not inefficient. Unnecessary. And the market agreed.
When layoffs correct past hiring mistakes, they’re cyclical. They pass. When layoffs reflect a structural redefinition of how work gets done, they’re permanent. And they spread.
Here’s what most analysts are missing. The real signal isn’t that Block deployed A.I. and realized it could save money, it’s that Block needed 10,000-plus people to do what it was doing in the first place.
A.I. gave Dorsey cover to fix a structural problem that predates A.I. entirely. Block employed fewer than 4,000 people at the end of 2019. It ballooned past 10,000 during the pandemic hiring frenzy, adding layers of management and coordination overhead that slowed execution. Companies with strong operational design were already lean. They don’t face this choice the same way. The ones in danger are organizations that grew bloated, confused hiring with progress and now carry thousands of roles that exist primarily to coordinate other roles. A.I. didn’t create the bloat. But it just made the bloat indefensible.
The market reaction is the most dangerous part
Block’s stock jumped 25 percent after the announcement. That market reaction should concern everyone far more than the layoffs themselves. We’ve just established a clear, public incentive: fire your people, replace them with A.I. and the market will reward you handsomely. Every CEO in America saw that number Thursday night. Every board member. Every activist investor.
Consider the chain reaction. Board members and investors will now demand other technology companies follow suit. No CEO wants to be the one who kept 10,000 employees when the market celebrated companies that kept 6,000. When one company lays off and gets rewarded, it becomes hard for others not to follow. And, when dozens of companies cut simultaneously, driven not by financial distress but by investor pressure, the labor market faces a fundamentally different kind of stress. Recruitment pipelines weren’t built for synchronized workforce reduction. Benefits systems weren’t designed for it. Some analysts are already circulating the term “self-organized criticality” which is the phenomenon where a single event triggers cascading, system-wide change. Block may be that event.
If you’re saying, “This won’t happen to me,” re-evaluate your thought process immediately. It may be the most important thing you do this year.
Dorsey didn’t just describe what Block is doing; he issued a prediction that “Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes. I’d rather get there honestly and on our own terms than be forced into it reactively.” He’s telling you, plainly, that your company is next. Whether your CEO acts proactively like Dorsey or gets dragged into it by shareholders who saw Block’s stock chart, the destination is the same. The only variable is whether it happens on your terms or theirs.
If you work in an office and you haven’t made yourself A.I.-native, and if you don’t understand how to orchestrate agents, automate workflows and use intelligence tools as force multipliers, then you should be operating under the assumption that your role is at risk within the next 12 months. It’s the logical conclusion of what the market just told us it values.
Where is the abundance?
For years, we’ve been told A.I. would create abundance and that new categories of work would replace old ones. That the net effect on employment would be positive, just as it was with previous technological revolutions. Where are those jobs?
Block just cut 4,000 roles and got rewarded with a stock surge. U.S. companies announced 108,435 layoffs in January 2026 alone, which is up 118 percent from a year earlier. In 2025, companies directly attributed 55,000 job cuts to A.I., twelve times the number from two years prior. New jobs aren’t materializing at the pace that displaced workers need. And the skills gap between what’s being eliminated in the middle-management coordination, routine analysis, first-draft content creation and what’s demanded by A.I. orchestration, system design, agent management is enormous. The transition isn’t seamless or gradual, and no one is managing the affected through it.
The people who will thrive are building and starting companies and creating products. They’re using A.I. to generate value rather than waiting for a corporation to define their role. The entrepreneurial game has never been stronger because depending on a large organization to guarantee your employment just got dramatically less reliable.
The clock has rung
Block’s decision will be studied in business schools for decades. It will be cited as either the moment corporate America woke up to the A.I. reality or the moment it sleepwalked into a workforce crisis. Probably both.
Dorsey described Block’s future as an “intelligence-native company” with A.I. not layered on top of existing processes but embedded in the foundation. We need A.I. proficiency integrated into every professional curriculum. We must immediately create workforce transition infrastructure that treats this as permanent, and we need to open an honest public dialogue about what this means for the social contract between employers and employees.
The comfortable fiction that A.I. will only eliminate jobs nobody wanted is crumbling in real time. Block didn’t cut administrative assistants. It cut engineers, product managers, analysts and operational staff across the entire organization. The breadth tells us that intelligence tools are reaching into every layer of the knowledge-work stack.
Jack Dorsey is one of the most consequential entrepreneurs of his generation. When someone with that track record says A.I. is about to reshape every company in America, and then proves he means it by cutting his own organization in half, the prudent response is to take him at his word. “I don’t think we’re early to this realization,” he said. “I think most companies are late.”
Block isn’t getting ahead of the curve, it is the curve. And the rest of corporate America just got put on notice. The question is no longer whether your company will be restructured around intelligence tools. It’s whether you’ll do it on your terms or at the mercy of a market that just showed you exactly what it values. Expect much more of this. Prepare accordingly.