Block shares surge 25% as ex-Twitter CEO Jack Dorsey lays off 4,000 employees due to AI; here's why

Shares of Block Inc. surged around 25% in after-hours trading after CEO Jack Dorsey on Thursday announced that the company will lay off 4,000 employees, saying a smaller team equipped with artificial intelligence tools can “do more and do it better”.

Dorsey, formerly the CEO of Twitter (now renamed X by Elon Musk), said in a letter to shareholders that these intelligence tools have changed what it means to build and run a company, with their capabilities compounding faster every week.

“I don't think we're early to this realization. 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 said.

Customers to face economic effects of AI shift tooL Dorsey

Dorsey said the move is not just about efficiency, noting that Block serves millions of customers who will also experience the economic effects of the same technological shift.

Intelligence will be at the core of how the entire company operates going forward, he said, adding that it will shape how teams make decisions, build trust, manage risk, develop products and serve customers. “We believe Block will be significantly more valuable as a smaller, faster, intelligence-native company. Everything we do from here is in service of that,” he said.

Layoffs not because Block is in trouble

The executive, however, said the decision was not driven by business weakness, noting that the company’s fundamentals remain strong, with gross profit rising, its customer base expanding and profitability improving.

He added that the company could have reduced its workforce gradually over months or years but wanted to avoid repeated rounds of layoffs, which he described as “destructive to morale, to focus, and to the trust that customers and shareholders place in our ability to lead”.

“I'd rather take a hard, clear action now and build from a position we believe in than manage a slow reduction of people toward the same outcome. A smaller company also gives us the space to grow our business the right way, on our own terms, instead of constantly reacting to market pressures,” he added.

The announcement came as Block reported a 24% year-on-year (YoY) rise in gross profit to $2.87 billion and a 20% adjusted operating income margin in Q4 FY25. “We are now expecting gross profit growth of 18% year over year for 2026 and adjusted operating income of $3.20 billion, or a 26% margin,” the company said.

The AI-driven layoffs come amid broader concerns about disruption in the tech sector, which has weighed on software stocks globally. Back home, IT stocks have fallen by as much as 20% on Dalal Street so far this month.

(With inputs from agencies)

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