Block's 24% Stock Jump Will Cost More Jobs Than Its AI Ever Could

Five days before Jack Dorsey fired half his company, Sam Altman told the world that most AI layoffs were fake.

Altman's argument had teeth. Companies were "AI washing" their cuts, borrowing the language of artificial intelligence to dress up financially motivated headcount reductions. Under 1% of 2025 job losses actually traced to AI, according to data he cited. A Forrester report from January backed him up, finding that the efficiency gains executives claimed were often exaggerated.

Then Thursday happened. Dorsey's post on X laid out the damage. More than 4,000 employees, gone. The company shrinks from over 10,000 to just under 6,000, nearly half the workforce wiped out in one letter. He didn't call it restructuring. Didn't blame the economy. He said AI had made these roles unnecessary, said it out loud and on the record, while posting the strongest quarterly earnings in Block's history. $2.87 billion in gross profit, a 24% jump. EPS nearly 40% higher than a year earlier. Full-year guidance raised.

The stock jumped 24% in after-hours trading. Roughly $8 billion in market value appeared before Dorsey's X post finished making the rounds.

Forget the 4,000 jobs for a moment. The AI claims too. The 24% is the number that rewrites corporate behavior. Every CEO in America watched a man fire nearly half his workforce, blame a technology with unproven productivity gains at his own company, and walk away with Block's best single-day stock move in years.

Dorsey didn't just cut jobs on Thursday. He wrote a template. The market priced it at billions.

The formula Dorsey actually sold

Strip away the language about "intelligence-native operations" and "agentic AI infrastructure," and what Dorsey demonstrated Thursday reduces to four steps. Post strong earnings. Announce deep cuts. Say the word AI, preferably in a public letter your investors will screenshot. Watch the stock climb.

The earnings were genuinely strong. Block's Q4 gross profit grew 24% to $2.87 billion. Cash App surged 33% year-over-year. The company crossed the Rule of 40 for the first time, the industry benchmark where gross profit growth plus adjusted operating income margin tops 40%. Those numbers would make any earnings call a win. None of them required a layoff to explain.

But Dorsey attached the cuts anyway. "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," he wrote on X. Then he went further. "Within the next year, I believe the majority of companies will reach the same conclusion."

What evidence did he offer that AI had actually displaced 4,000 specific roles? Almost none. He referenced "intelligence tools" without naming them. Block's CFO Amrita Ahuja said the cuts would let the company "move faster with smaller, highly talented teams using AI to automate more work." How much work? Which work? Neither answered.

Critics saw the pattern immediately. "Unwinding less than half an insane COVID overhiring binge has much more to do with Jack Dorsey's managerial incompetence than whether AI is going to take your job," one investor wrote on X. The numbers back that read. The hiring binge tells the story on its own. Block went from 5,477 employees to nearly 13,000 in three years. Dorsey built the same organizational excess at Block that he'd already apologized for at Twitter.

Dorsey borrowed more than Musk's tone. When Musk took Twitter private in 2022, Dorsey was already inside the deal. He'd rolled his 2.4% ownership stake into the takeover rather than take the cash. Musk axed roughly half the staff. The product kept running. Dorsey watched the whole thing from the investor table. Three years later, he ran the same play at his own company. Musk never needed an AI justification. He just fired people. Dorsey added the narrative layer that makes the template exportable to companies not run by the world's richest man.

Why the AI-washing critique already doesn't matter

Altman was probably right. Most companies citing AI as a reason for layoffs are reaching for a fashionable justification. The Forrester data says the actual productivity gains don't support the scale of cuts being announced.

Being right changes nothing about the incentive.

When Microsoft cut 9,000 jobs during record profits last year, the playbook was still forming. Executives hedged. They talked about "efficiency" and "realignment." Left room for interpretation. The market rewarded them, but quietly. The layoffs looked like housekeeping. Uncomfortable, but routine.

Dorsey killed the hedge. Said the quiet part with a megaphone. Block's investor base went from cautious to emboldened in a single after-hours session.

Here's what none of the counterarguments can touch. You can call it AI washing. You can cite every study ever published. You can point out that Block tripled headcount during COVID and is correcting a hiring binge Dorsey himself created. Every one of those critiques holds up. None of them register with a board watching Block's stock chart over coffee on a Friday morning.

The AI-washing critique assumed markets would eventually punish companies for unsubstantiated productivity claims. Thursday blew that assumption apart. Markets don't care whether AI actually replaced those 4,000 roles. They care that a CEO said it did while holding up a strong earnings report. The stock pop is the product. The AI story is how you sell it.

And if you're a CEO sitting on bloated headcount you've been meaning to trim for two years, Dorsey just solved your messaging problem.

The cascade starts with a Bloomberg terminal

The math spreading through boardrooms is blunt. Block spent $450 to $500 million on restructuring charges, most of it severance. The market handed back roughly $8 billion in added value, most of it in the first hour of after-hours trading. Imagine explaining that ratio to your CFO over a whiteboard. The return on firing people has never looked this clean on a slide deck.

Signs of the cascade are already visible. In January alone, U.S. companies announced 108,435 layoffs, up 118% from a year earlier and the highest January figure since 2009, per Challenger, Gray & Christmas. Amazon cut 16,000 jobs weeks before Block's announcement. Pinterest and CrowdStrike have both cited AI in recent workforce reductions. eBay announced 800 cuts on the same Thursday.

The pattern extends beyond pure tech. Mark Zuckerberg told Meta employees 2026 would be "the year that AI dramatically changes the way we work." One person can now do what used to require a full team, he said. A CEO with 70,000 employees doesn't say that as small talk. That's a schedule.

Shopify CEO Tobi Lutke set the policy version of this trend a year ago, requiring teams to prove they couldn't accomplish work with AI before requesting headcount. Lutke's memo quietly rewired how Shopify hires. Dorsey went bigger. His announcement landed differently, because every public company north of 5,000 employees had to sit with it.

One X user put it directly. "By Q2, if you aren't firing lots of employees, your board will fire you for being a dinosaur who doesn't implement AI."

That reads like hyperbole. Give it three months.

Who pays when the copies get worse

Dorsey set a generous floor, give him that. Affected employees get 20 weeks of salary plus one week per year of tenure, equity vesting through May, six months of healthcare, corporate devices, and a $5,000 transition fund. The SEC filing put the restructuring tab at $450 to $500 million.

Dorsey held an all-hands video call afterward. He wore a black cap that read "LOVE." He was explaining why half the company no longer worked there. Thumbs-down emoji flooded the screen by the dozen. One employee asked if the hat was a good fashion choice for firing half the company. The awkwardness Dorsey said he preferred to coldness arrived on schedule.

But templates degrade as they spread. The first version is always the most generous.

Klarna offers a preview of what comes next. CEO Sebastian Siemiatkowski said AI had replaced roughly 700 customer service agents. Headcount dropped 40%. The market cheered. Then quality slid and Klarna started rehiring. The whole cycle took less than 18 months. The market rewarded the cut and then punished the consequences. Nobody talks about that part when presenting the template to their board.

Block is cutting deeper and wider. More than 4,000 roles across every function, not just customer service. Dorsey is betting the problems that gutted Klarna's experiment won't reach him. Whether that's confidence or something less flattering will take a year to sort out.

And the workers who get cut in the copycat wave, at companies less profitable than Block with executives less careful about severance, will get worse packages. The anxious energy running through corporate America will produce faster, colder versions of Thursday's playbook. No transition fund. No open Slack for goodbyes. Just a calendar invite and a form to sign.

The number that echoes

Altman diagnosed the problem correctly. Companies dress up layoffs with AI language they haven't earned. He misjudged what follows.

The market doesn't care about the gap between claim and reality. It cares about the signal. Block's signal was a 24% stock jump on the day 4,000 people lost their jobs.

Dorsey didn't prove AI can replace half a payments company. He showed no output metrics, no before-and-after efficiency data, nothing that would survive a serious audit. What he proved was simpler and, for anyone watching the labor market, more dangerous. The market will pay you billions for making the claim.

By summer, you'll hear his language echoed in earnings calls across the S&P 500. "Intelligence tools." "Smaller, flatter teams." "A new way of working." The stock pops will shrink as the novelty fades. The layoffs won't.

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