Block Shares Surge as Dorsey Cuts 40% of Workforce in ‘AI-Native’ Restructuring
SAN FRANCISCO – Block Inc (SQ.N) said on Thursday it would cut more than 4,000 jobs, or nearly 40% of its workforce, as Chief Executive Jack Dorsey pivots the payments giant toward an “AI-native” operating model designed to replace human labor with automated intelligence tools.
The restructuring, one of the deepest in the fintech sector’s history, reduces Block’s headcount from approximately 10,200 to under 6,000. The announcement accompanied a strong fourth-quarter earnings report that sent shares surging 23% in extended trading, as investors cheered the company’s aggressive commitment to efficiency and profitability over headcount growth.
In a letter to shareholders released alongside the earnings, Dorsey described the move not as a cost-cutting necessity but as a strategic evolution enabled by proprietary artificial intelligence. He specifically highlighted an internal platform codenamed “Goose,” which the company claims allows significantly smaller teams to execute engineering and customer service tasks with greater speed than its previous workforce.
“Intelligence tools have changed what it means to build and run a company,” Dorsey wrote. “A significantly smaller team, using the tools we’re building, can do more and do it better. And intelligence tool capabilities are compounding faster every week.”
The ‘Goose’ Strategy: Replacing Headcount with Compute
The scale of the reduction—far exceeding the 10-15% cuts seen across the tech sector in 2024 and 2025—signals a potential watershed moment for the labor market. While companies like Klarna and Google have previously reduced hiring rates due to AI, Block’s direct substitution of existing roles with automated systems represents a more aggressive stance.
Sources close to the matter indicated that the “Goose” platform automates complex workflows across Block’s Square and Cash App ecosystems, including code generation, compliance monitoring, and merchant onboarding. Dorsey noted that the company had been testing the tool’s capabilities throughout 2025, concluding that its previous organizational structure was “slow” and “bloated” by comparison.
“We are taking bold and decisive action here, but we are doing it from a position of strength,” said Block CFO Amrita Ahuja in a statement. The company raised its full-year 2026 guidance, projecting gross profit growth of 18% and adjusted operating income of $3.2 billion, citing the immediate reduction in payroll expenses.
Market Reaction: Wall Street Applauds Efficiency
Investors responded with immediate enthusiasm. Block shares, which had lagged peers in early 2025, spiked to $81.93 in pre-market trading on Friday. Analysts at Macquarie and Citigroup maintained ‘Buy’ ratings, raising their price targets to reflect the improved margin profile.
“This is the ‘Rule of 40’ on steroids,” wrote an analyst at Wolfe Research, referring to the software metric where growth rate plus profit margin should exceed 40. “Dorsey is effectively betting that AI can maintain product velocity without the operational drag of a 10,000-person organization.”
However, some market observers urged caution regarding operational risks. “Cutting 40% of staff in one stroke is genuinely difficult to do without disrupting core products,” noted a fintech analyst at Forbes. “Losing that much institutional knowledge creates risks across engineering and compliance that AI cannot immediately solve.”
Q4 2025 Earnings: Growth Accelerates
Overshadowed by the layoff news, Block’s financial results for the quarter ended December 31, 2025, exceeded Wall Street expectations.
Gross Profit: $2.87 billion, up 24% year-over-year.
Cash App: Gross profit grew 33% to $1.83 billion, driven by increased monetization of banking actives.
Square: Gross payment volume (GPV) growth accelerated to 12%.
Guidance: The company now expects to exceed its ‘Rule of 40’ target for the full fiscal year 2026.
Dorsey stated that the savings from the workforce reduction would be reinvested into “marketing and machine learning compute,” rather than hiring.
Deep Dive: The Future of AI in Fintech
Why is Block cutting 4,000 jobs now?
Block is cutting jobs to transition to an “AI-native” structure. Unlike layoffs driven by financial distress, CEO Jack Dorsey framed this as a proactive shift to utilize “intelligence tools” like their proprietary “Goose” platform. The move aims to flatten the organization, remove bureaucratic layers, and leverage AI for tasks previously requiring human oversight, thereby drastically increasing revenue per employee.
What is Jack Dorsey’s ‘Goose’ AI tool?
“Goose” is an internal AI platform developed by Block to automate workflows across engineering, operations, and customer support. While specific technical details remain proprietary, the tool is credited with enabling the company to operate effectively with a 40% smaller workforce. Dorsey claims the tool allows smaller teams to ship code and resolve customer issues faster than larger, human-heavy teams.
How did Block’s Q4 2025 earnings perform?
Block reported strong Q4 2025 results, with gross profit rising 24% year-over-year to $2.87 billion. Cash App was a standout performer, growing gross profit by 33%. The company also reported accelerating growth in its Square merchant business, defying fears of a consumer spending slowdown. These results reinforced Dorsey’s claim that the layoffs were made from a “position of strength.”
Is Block (SQ) stock a buy after the layoffs?
Most analysts have reacted positively, pushing the stock up over 20%. Firms like Citigroup and Macquarie have raised price targets, citing the massive improvement in operating margins and profitability expected in 2026. However, investors should weigh this against the execution risk of such a large restructuring. If the AI tools fail to plug the gap left by 4,000 employees, service quality could suffer.
Will other fintech companies follow Block’s strategy?
It is highly likely. Dorsey explicitly predicted that “most companies will reach the same conclusion” regarding AI and headcount. With Block demonstrating that a major fintech can (theoretically) maintain growth with 40% fewer staff, competitors like PayPal, Affirm, and SoFi may face investor pressure to adopt similar “AI-efficiency” measures to boost margins.
What are the risks of replacing staff with AI?
The primary risks include “operational discontinuity” and the loss of institutional memory. AI models can hallucinate or struggle with complex, edge-case reasoning that human employees handle naturally. Furthermore, a 40% cut can severely impact the morale of remaining employees (“survivor syndrome”), potentially leading to the exit of top talent that the company intended to keep.