Jack Dorsey is betting big on AI. And he just made the most dramatic statement a tech CEO can make: cut nearly half the workforce.

Block, the company behind Square, Cash App and Afterpay, is laying off more than 4,000 people. That shrinks the company from over 10,000 employees to just under 6,000.

Intelligence tools have changed what it means to build and run a company. We are already seeing it internally. A significantly smaller team using the tools can do more and do it better, Dorsey said in a statement.

The Market Reaction

Here is the striking part: investors loved it. Block shares surged as much as 24% after the announcement.

That is because this is not a company in trouble. Block posted 24% gross profit growth in the latest quarter. The company is making money. Dorsey explicitly guaranteed the cuts were not happening because the business is struggling — our business is strong, he wrote on X.

It is happening because Dorsey believes AI can do the job of more humans. Better.

The Dorsey Bet

Dorsey thinks most companies are late to this realization. In a post on X, he wrote: I believe the majority of companies will reach the same conclusion and make similar structural changes within the next year. I would rather get there honestly and on our own terms than be forced into it reactively.

The company expects to incur 450 million to 500 million dollars in restructuring charges. Affected employees will receive severance for 20 weeks or more, equity vested until the end of May, six months of healthcare, and an extra 5,000 dollars.

A Seminal Moment

The layoffs represent a seminal moment in the AI era, analysts at Evercore ISI wrote. They signal how the AI boom is translating from hype into workforce changes.

This is not Block-specific. Amazon, Meta, Microsoft, and Verizon have all made sweeping cuts tangentially related to AI in the past year. But Block is unique in being explicit: the reason is AI.

Most companies blame AI for layoffs while also doing other things — restructuring, market shifts, pandemic overhiring. Dorsey is saying the quiet part out loud: we are replacing humans with AI because the math works.

The Bigger Question

Dorsey is betting that AI can do the job of twice as many people. The market is rewarding that bet with a 24% stock surge.

The question is what happens when every company reaches the same conclusion.

Sources:

• Reuters - Jack Dorseys Block to cut nearly half its workforce in AI overhaul, shares surge
• CNN Business - Block lays off nearly half its staff because of AI. Its CEO said most companies will do the same
• CNBC - Block shares soar as much as 24 percent as company slashes workforce by nearly half
• Bloomberg - Jack Dorseys Block Slashes Nearly Half of Workforce in AI Bet