Block Layoffs: Jack Dorsey Cuts 4,000 Jobs & AI Is Why

On February 26, 2026, Jack Dorsey did something no major tech CEO had done quite so explicitly before: he fired nearly half his company, watched the stock soar 22%, and then told every other CEO in America that they're going to have to do the same thing. Soon.

Block, the fintech company behind Cash App, Square, and Afterpay, is reducing its workforce from over 10,000 employees to just under 6,000. The cuts, 4,000 jobs gone in a single day, are the largest single-day AI-driven workforce reduction in the company's history, and arguably the most explicit such move in corporate America to date.

This wasn't a quiet restructuring memo. Dorsey posted the note to his staff on X, told analysts on an earnings call that most companies are already late to this realization, and then let the market speak for itself. Block's shares jumped as much as 27% in after-hours trading.

Wall Street cheered. Four thousand people lost their jobs. And Dorsey said your company is next.

Not a Crisis — A Calculation

The framing here matters enormously, and Dorsey was deliberate about it. This is not a distressed company making desperate cuts. Block reported full-year 2025 gross profit of $10.36 billion, up 17% year-over-year. Q4 gross profit jumped 24% to $2.87 billion. Cash App gross profit surged 33% in the quarter. For 2026, the company raised its earnings guidance to $3.66 per share, a figure that crushed analyst expectations of $3.22 by a wide margin.

Dorsey said it plainly in his shareholder letter: "We're not making this decision because we're in trouble. Our business is strong."

Instead, he made a bet. A bet that AI tools, specifically Block's internally-built platform called Goose, have crossed a threshold that makes a team of 6,000 as productive as a team of 10,000. Or more.

"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."— Jack Dorsey, Block CEO, Shareholder Letter, Feb 26, 2026

The numbers behind that bet are striking. According to reporting, Block's Goose platform, which started as a small engineering experiment roughly two years ago, has expanded across nearly every department. Engineers using Goose are shipping approximately 40% more code per person than they were just six months ago. That productivity figure, Dorsey argues, is what made the headcount reduction not just viable, but rational.

The December Moment

Perhaps the most revealing detail of Dorsey's announcement wasn't the number of jobs cut; it was the timing of the decision. On the analyst call, Dorsey pointed to a specific inflection point.

"Something happened in December of last year, just last year, where the models just got an order of magnitude more capable and more intelligent, and it's really shown a path forward in terms of us being able to apply it to nearly every single thing that we do."— Jack Dorsey, Analyst Call, February 2026

He called it an "application gap", meaning the only remaining limitation isn't the capability of the AI tools, it's whether companies are deploying them aggressively enough. Block is closing that gap by removing the organizational weight that slows deployment down: headcount.

This is a fundamentally different justification than previous tech layoff waves. In 2022 and 2023, companies like Meta, Google, and Amazon cited over-hiring during the pandemic and macroeconomic headwinds. Those cuts had an implicit endpoint; once the workforce was rationalized, stability would return.

Dorsey is saying something more permanent: the endpoint is a structurally smaller company, and AI tools are what make that both possible and preferable.

"Your Company Is Next"

The most consequential thing Dorsey said Thursday wasn't about Block. It was about everyone else.

On the analyst call, he said: "I don't think we're early to this realization. I think most companies are late. 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."

That's not corporate hedging. That's a roadmap. And the market's reaction, a 22% stock surge, not a selloff, is the signal that will echo through boardrooms for months.

Block is not alone in executing this playbook. The pattern is already forming across the sector. Amazon announced 16,000 job cuts last month, just three months after slashing 14,000 more. eBay cut 800 roles the same day as Block's announcement. Pinterest cut less than 15% of its workforce, citing AI reallocation.

Klarna has quietly reduced headcount by roughly half since 2022 through attrition, with its CEO openly crediting AI. Salesforce and Meta have made similar moves. The U.S. recorded 108,435 announced layoffs in January 2026 alone, up 118% from a year prior and the highest January total since 2009.

The question is no longer whether this is happening. The question is how fast, in which roles, and whether anything replaces what's being lost.

What Jobs Are Actually at Risk

Block gave relatively little granular detail about which specific roles are being eliminated. The shareholder letter described the company moving toward "smaller, flatter teams" deploying AI to automate more work, but didn't break down the cuts by function.

However, the contours of AI displacement in fintech and technology more broadly are becoming clear. The roles most immediately vulnerable fall into a few clear categories:

• Software engineering- coding assistance tools like Block's Goose, Anthropic's Claude Code, and OpenAI's Codex are enabling individual engineers to produce output that previously required teams. Dorsey's 40% productivity gain figure is the clearest public data point yet for what this looks like at scale.

• Customer support and operations- AI agents are increasingly handling tier-1 and tier-2 support queries that once required large service teams. This is where fintech companies process the most volume of routine work.

• Data and analytics- automated reporting, anomaly detection, and business intelligence generation are increasingly handled by AI pipelines rather than human analysts.

• Middle management and coordination- flatter organizational structures, enabled by AI productivity tools, reduce the need for layers of managers whose primary function was coordination and status reporting.

The roles less immediately at risk are those requiring relationship management, regulatory judgment, complex sales, and creative strategy, though even these are being compressed, with AI handling more of the supporting work that justified large team sizes.

The Severance Question, and Why It Matters

Dorsey was unusually detailed about the severance package, and it's worth examining why. Departing employees receive 20 weeks of base salary plus one additional week per year of tenure. Equity continues vesting through the end of May. Six months of healthcare coverage. Corporate devices to keep. And a $5,000 transition allowance for international employees.

By the standards of the current tech layoff wave, this is generous. It also appears to be deliberate positioning. Dorsey chose a clean, one-time cut over the "death by a thousand cuts" approach, explicitly saying that gradual reductions destroy morale, focus, and trust. He estimated the total restructuring cost at $450 to $500 million, consisting primarily of severance and related charges.

That math is telling. Block is spending half a billion dollars to eliminate headcount, and the market still sent the stock up 22%. The implied message to shareholders: the long-term savings and productivity gains from a leaner, AI-native team more than offset a $500 million one-time charge. That calculus, if it holds, will be replicated.

The Jobs Question Nobody Wants to Answer

The standard reassurance in conversations about AI and employment is that new technologies create new jobs. Automation replaces certain tasks, but unlocks new categories of work. This has generally been true across previous waves of technological change, from the industrial revolution through the digital revolution.

But Dorsey's announcement, and the market's response to it, highlights a discomfort that's increasingly hard to paper over. As CNBC's Jim Cramer put it in a commentary the same day: "I keep getting told on CNBC that AI will create new jobs to replace those being lost. I've been asking the same question for years now. What are those jobs?"

It's a fair question, and right now, there is no satisfying answer. The jobs most plausibly created by the AI wave, AI engineers, prompt designers, model trainers, AI safety specialists, are high-skill and relatively few in number compared to the operations, support, and coordination roles being displaced at scale.

What is clear is that the skills premium is shifting dramatically. Block's explicit requirement that every remaining employee be AI-fluent — to the point of embedding AI usage into performance reviews — is a preview of the new baseline expectation across technology and, increasingly, finance. Workers who can direct, evaluate, and amplify AI tools will have leverage. Workers who compete with those tools directly will face structural headwinds that no amount of retraining advocacy fully resolves in the short term.

A Forrester Research report published last month added a useful caveat: some analysts question whether the AI productivity gains being cited by companies are as real as advertised, or whether AI is simply serving as a convenient justification for cost cuts that would have happened anyway in a difficult macro environment. That skepticism is legitimate. But Dorsey's specific citation of Goose enabling 40% more code per engineer, tied to a real internal tool with two years of deployment history, makes Block's case harder to dismiss as pure AI-washing.

One Clean Cut

Dorsey's decision to make the cuts all at once rather than gradually is worth noting on its own terms. He described the alternative, repeated, smaller layoff rounds over months or years, as something that destroys morale and trust. That framing rings true to anyone who has watched the slow-bleed layoff cycle play out at companies like Amazon, which has now made significant cuts in three separate tranches over the past year.

Whether 6,000 employees is the right number for Block to execute its AI-native strategy is something only the next few quarters will answer. The company's 2026 gross profit guidance of $12.2 billion and its raised EPS outlook suggest management has conviction. If those numbers hold or improve, the experiment becomes a template.

If they don't, the story becomes a cautionary tale about a CEO who mistook AI optimism for operational reality.

Either way, Jack Dorsey has made something visible that most of corporate America has been quietly calculating in private. The workforce reckoning tied to AI isn't coming. It's here. Block just put a number on it: 4,000 jobs, one day, and a stock price that told you exactly how investors feel about that.