US Stocks: Block Stocks Surge 16% as Jack Dorsey Relies on AI to Shrink Workforce

Block shares rose more than 16% on Friday after the fintech company announced it would cut its workforce nearly in half as part of an overhaul to integrate artificial intelligence tools into its operations.The layoffs are the most visible signs of how the industry is dealing with the impact of AI, with Block’s CEO, technology billionaire Jack Dorsey, warning that most companies were “late” in realizing the emerging technology’s potential.

“At its core, it’s about how to manage some businesses going forward – not just reducing headcount at doomsday, but also enabling higher ROI investments in growth and free cash flow,” Evercore ISI analysts wrote, referring to free cash flow.

The accelerated adoption of AI is helping companies eliminate jobs in divisions most exposed to automation. Economists at Goldman Sachs estimate that AI was responsible for job losses that would impact average monthly job growth in the sectors most exposed to it by 2025.

Block was among the companies that hired aggressively during the pandemic as use of digital payments and online commerce surged.

“In Block’s case, this looks like a mix of AI efficiency gains and an overdue cleanup of corporate bloat,” said Matt Britzman, an analyst at Hargreaves Lansdown.

The company’s workforce increased from approximately 3,800 employees in 2019 to more than 10,000 by 2025 as it faced increasing pressure from increasing competition in the payments and buy-now-pay-later segments.

“While the RIF (reduction in force) is large, it returns Block’s workforce to pandemic-era levels, making it a standout gross profit per employee, well ahead of its peers, including Visa,” JP Morgan analysts said.