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Block Slashes Workforce by 40% Amid AI Revolution
28 Feb
Summary
- Block cut about 40% of its workforce, reducing headcount significantly.
- CEO Jack Dorsey cited AI tools as the fundamental reason for the cuts.
- Investors reacted positively, boosting Block's stock by 17%.
Block has announced a substantial workforce reduction, cutting approximately 40% of its employees and decreasing headcount from over 10,000 to under 6,000. CEO Jack Dorsey attributed this decision to the transformative impact of artificial intelligence tools on business operations, suggesting this is a harbinger for corporate America. Investors reacted favorably to the announcement, sending Block's stock up by 17% in recent trading.
Analysts from Morgan Stanley and Goldman Sachs have expressed optimism, with upgrades and raised price targets, citing potential for increased profitability and workforce productivity driven by AI efficiencies. Block anticipates restructuring costs between $450 million and $500 million, with the majority of cuts expected by mid-year. Dorsey emphasized acting decisively to maintain morale and trust.
The scale of Block's cuts dwarfs recent AI-related layoffs at other tech companies, intensifying the ongoing debate about AI's impact on employment. Skeptics point to Block's significant hiring during the pandemic, taking headcount back to 2020 levels. However, the company aims for a fourfold increase in gross profit per employee. Analysts like those at Piper Sandler remain cautious, reiterating sell ratings due to other financial concerns despite the stock's positive reception.
