Block Inc Lays Off 4,000 Employees: Jack Dorsey Blames AI, XYZ Stock Surges 22%
Jack Dorsey just made the most dramatic workforce decision in Silicon Valley this year. Block, the payments company he founded that operates Square, Cash App, and Tidal, is cutting more than 4,000 employees — nearly half its global workforce — taking it from over 10,000 workers down to just under 6,000. Block XYZ stock surged 22% in after-hours trading on Thursday, February 26, 2026 ET, in response to the announcement.
Jack Dorsey's Message to Employees and Shareholders: "Our Business Is Strong"
Dorsey guaranteed the cuts were not happening because the business is struggling. "Our business is strong… gross profit continues to grow," he wrote in a letter to shareholders. He framed the Block layoffs as a proactive choice rather than a financial emergency.
Dorsey wrote that intelligence tools have changed what it means to build and run a company and Block is already seeing it internally. A significantly smaller team, using the tools the company is building, can do more and do it better — and intelligence tool capabilities are compounding faster every week.
Block Inc Layoffs Are a Direct Bet on AI Replacing Human Roles
The Block layoffs represent one of the most explicit AI-driven workforce restructurings in corporate history. Block has been restructuring its business model and staffing since 2024 as the company's stock has lagged. At the same time, the company has invested heavily in AI tools to run more efficiently, including building its own tool called Goose.
Block joins other tech companies that have slashed jobs in the past 12 months, adding to white-collar anxieties in a feel-bad job market. Block is the latest high-profile company to openly link its headcount reduction to an embrace of AI. Amazon, Meta, Microsoft, Pinterest, CrowdStrike, and Chegg have all made similar cuts in recent months.
Dorsey Warns All Companies Will Follow Within a Year
The most startling element of Thursday's announcement was not the scale of the Block layoffs — it was Dorsey's explicit prediction about what comes next for corporate America. Dorsey thinks most companies will follow suit in the near future. "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," he wrote.
Dorsey framed the decision as a compassionate choice, arguing that repeated rounds of cuts are destructive to morale, to focus, and to the trust that customers and shareholders place in leadership. The alternative — gradual reductions over months or years — was the path Dorsey explicitly rejected.
Block Severance Package: 20 Weeks Pay, Healthcare, and $5,000 Transition Support
Despite the enormous scale of the Block layoffs, Dorsey structured a generous severance package for those being let go. Affected employees will receive 20 weeks of salary plus one additional week per year of tenure. They will also receive equity vested through the end of May, six months of healthcare coverage, corporate devices, and $5,000 in transition support. International terms will vary based on local laws.
The company said it expects to incur roughly $450 million to $500 million in restructuring charges as part of the Block layoffs. Block's adjusted profit grew sharply in its most recent quarter — 65 cents per share versus 47 cents a year earlier — with gross profit up 24% driven by a 33% surge in Cash App.
Block XYZ Stock: From a 75% Five-Year Drop to a 22% Single-Day Surge
The market's response to the Block layoffs was immediate and enthusiastic. Block's share price had dropped more than 75% over the past five years while the company nearly doubled its headcount between late 2020 and 2025. Wall Street has sent a clear signal: it prefers a leaner Block Inc over a larger one.
Investors responded enthusiastically, sending the XYZ stock up more than 24% in after-hours trading. The two men — Dorsey and Elon Musk — have had one of tech's stranger relationships, with warm words giving way to public shots, then back again. Musk slashed roughly 50% of Twitter's staff in November 2022 after taking the company private — a move Dorsey publicly watched unfold from an unusual vantage point. Whether or not Dorsey was taking notes, Thursday's Block layoffs announcement suggests the answer may be yes.
