Block Lays Off 40% of Its Workforce — CEO Directly Blames AI

Mar 25, 2026 · #ai #layoffs #block #jack dorsey #jobs

Jack Dorsey wrote in an official shareholder letter that AI tools have changed what it means to run a company. Four thousand people lost their jobs. The stock jumped 20%.

Open office workspace

On February 26, 2026, Block — the company behind Square, Cash App, and Afterpay — announced it was reducing its workforce from over ten thousand to just under six thousand employees. More than four thousand people were let go. Roughly forty percent of the company.

What Dorsey Actually Said

CEO Jack Dorsey — co-founder of Twitter (now X) — published two public statements that day. The first was an official shareholder letter included with Block’s Q4 2025 earnings report. The second was a memo to employees, shared publicly on X.

In the shareholder letter, he wrote:

“The core thesis is simple. Intelligence tools have changed what it means to build and run a company. We’re already seeing it internally. 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.”

In the employee memo on X, he added:

“I had two options: cut gradually over months or years as this shift plays out, or be honest about where we are and act on it now. I chose the latter.”

When questioned about whether the layoffs were simply a correction from pandemic-era overhiring, Dorsey acknowledged in a separate X post that the company “over-hired during COVID” but emphasized that the current decision was driven by a technological shift, not just headcount correction.

Market Reaction

Block shares (ticker: XYZ) surged approximately 20-25% in after-hours trading the same day. Block simultaneously reported Q4 2025 results — gross profit grew 24% year-over-year to $2.87 billion.

Block CFO Amrita Ahuja told Fortune that gross profit per employee rose from roughly $500,000 in 2019 to approximately $1 million in 2025. Post-layoffs, the company is targeting $2 million per employee in 2026.

Codename Goose — Block’s Internal AI Agent

Block has been developing an internal AI tool codenamed “Goose” for approximately eighteen months — an AI agent built on top of large language models. Goose is open source and, according to Ahuja, has driven a 40% increase in developer productivity since September 2025.

During the analyst call, Dorsey stated:

“Something happened in December of last year where the models just got an order of magnitude more capable.”

He pointed to December model updates as the tipping point.

Oracle — Same Direction

The same week, on March 5, Bloomberg reported that Oracle is planning to lay off between twenty and thirty thousand employees. Oracle employs approximately 162,000 people globally.

According to Bloomberg, the driver is financial pressure from aggressive AI data center investments. Oracle plans to raise $45-50 billion in 2026, and Wall Street analysts project negative cash flow until approximately 2030.

Bloomberg adds that some of the planned cuts specifically target roles that Oracle considers replaceable by AI.

This remains a plan, not an official announcement. Oracle has not commented.

What This Means More Broadly

Block is one of the first major companies to explicitly, publicly, and officially in investor documents cite AI as the direct cause of mass layoffs.

Dorsey went further in an X post:

“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.”

Not everyone agrees. Wharton professor Ethan Mollick wrote on LinkedIn:

“Given that effective AI tools are very new, it is hard to imagine a firm-wide sudden 50%+ efficiency gain that justifies massive organizational cuts.”

An Oxford Economics report from January 2026 notes that many layoffs attributed to AI are actually the result of prior overhiring.

Regardless of how one interprets Dorsey’s motivations, his public statement sets a new precedent — AI as an official, documented justification for workforce reduction at an S&P 500 company.