Jack Dorsey's Bold Bet on AI-Driven Workforce Transformation
Block announced Thursday it's eliminating more than 4,000 positions, reducing its global workforce from over 10,000 employees to just under 6,000. The dramatic restructuring, which affects nearly half the company's staff, sent shares soaring over 24% in after-hours trading as investors embraced the cost-cutting measures. Co-founder and CEO Jack Dorsey framed the decision as a strategic pivot rather than a financial crisis, positioning Block to capitalize on artificial intelligence capabilities that he believes will fundamentally reshape how companies operate. The payments giant, which owns Square, Cash App, and Tidal, expects to incur between £370 million and £415 million in restructuring costs, primarily covering severance payments and employee benefits.
Dorsey didn't mince words about his expectations for the broader tech industry. "Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes," he wrote in his shareholder letter. He argued that getting ahead of this transformation now, rather than implementing gradual cuts over months or years, demonstrates stronger leadership and preserves company morale. "I'd rather get there honestly and on our own terms than be forced into it reactively," Dorsey explained, suggesting that companies delaying similar moves are simply postponing the inevitable.
AI Automation Drives Unprecedented Efficiency Gains
Block CFO Amrita Ahuja directly attributed the workforce reduction to artificial intelligence capabilities that enable smaller teams to accomplish significantly more work. "We are choosing to shift how we operate at a time when our business is accelerating and we see an opportunity to move faster with smaller, highly talented teams using AI to automate more work," Ahuja stated. This strategic shift comes as Block reported strong fourth-quarter results, with adjusted earnings per share of 65 cents on revenue of £5.19 billion, meeting analyst expectations. Gross profit jumped 24% year-over-year to £2.38 billion, demonstrating that the cuts aren't driven by financial distress but rather by a reimagining of operational efficiency.
The company's confidence in its AI-enhanced future shows in its forward guidance. Block projects full-year adjusted earnings per share of £3.04, significantly exceeding analyst estimates of £2.67. Meta CEO Mark Zuckerberg recently echoed similar sentiments, calling 2026 "the year that AI dramatically changes the way we work" and noting that projects previously requiring large teams can now be accomplished by single talented individuals. Most major tech companies now deploy AI tools that automatically generate computer code for software and websites, using platforms like Claude Code from Anthropic or Codex from OpenAI.
The Musk Playbook: Radical Cuts and Market Rewards
Dorsey's dramatic workforce reduction bears striking similarities to Elon Musk's controversial 2022 overhaul of Twitter, where he eliminated roughly 50% of staff shortly after acquiring the platform. Dorsey maintained an unusual front-row seat to that transformation, having rolled his approximately 2.4% Twitter ownership stake into Musk's takeover rather than cashing out. The two tech leaders share a complex relationship marked by mutual admiration for Bitcoin and unconventional management approaches, though their public interactions have oscillated between praise and criticism over the years.
The market's enthusiastic response to Block's announcement suggests investors increasingly reward aggressive cost-cutting measures, particularly when framed around AI adoption. This represents a significant shift from traditional Silicon Valley wisdom that prioritized growth and talent retention above near-term profitability. Dorsey explicitly positioned his decision as empathetic, arguing that "repeated rounds of cuts are destructive to morale, to focus, and to the trust that customers and shareholders place in our ability to lead."
Severance Packages and the Human Cost of Transformation
U.S.-based employees affected by the cuts will receive 20 weeks of salary plus one additional week for each year of service at Block. The severance package includes equity vested through the end of May, six months of healthcare coverage, corporate devices, and £4,150 to support their transition. International employees will receive comparable benefits adjusted for local regulations and policies. These provisions represent relatively generous terms compared to many tech layoffs, though they offer limited comfort to the thousands suddenly seeking new employment in an increasingly AI-skeptical job market.
Block expects to recognize most restructuring charges during the first quarter of 2026, with costs primarily consisting of severance payments, employee benefits, and non-cash expenses related to accelerated share vesting. The company had 10,205 employees worldwide as of 31 December 2025, according to its annual filing. While Dorsey presents the cuts as forward-thinking leadership, some analysts suggest tech executives may be overstating AI's immediate capabilities to justify financially motivated decisions. A recent Forrester Research report questioned whether companies are genuinely achieving the productivity gains they claim from AI tools, or simply using the technology as convenient cover for cost reductions.
The New Normal: AI-First Corporate Structures
Block joins a growing list of major technology companies directly attributing workforce reductions to artificial intelligence capabilities, including Pinterest, CrowdStrike, and Chegg. Amazon recently eliminated 16,000 positions after cutting 14,000 roles months earlier, with CFO Brian Olsavsky citing cost reductions needed to fund escalating AI infrastructure investments. Meta, Microsoft, and Google have similarly trimmed staff while dramatically increasing AI spending, signaling a fundamental reallocation of resources across the tech sector.
Dorsey's assertion that "most companies are late" to recognizing AI's transformative impact suggests he views Block's restructuring as just the beginning of a broader corporate evolution. His prediction that the majority of companies will implement similar changes within twelve months sets an aggressive timeline for what could become the most significant workforce disruption since the rise of automation in manufacturing. Whether this represents genuine technological progress or simply provides convenient justification for cost-cutting remains hotly debated. What's certain is that Block's dramatic move, and the market's positive reaction, will embolden other executives considering similar restructuring as they navigate the uncertain intersection of artificial intelligence capabilities and human workforce requirements.