Shocking the industry: Block cuts 4,000 employees at once as the global smart crisis unfolds early

Written by: 0xjs@Golden Finance

On February 26, 2026, the payment technology giant Block (formerly Square), founded by Twitter’s Jack Dorsey, announced a shocking decision:

Layoffs of over 4,000 employees, nearly half of its total staff, reducing the team size from over 10,000 to less than 6,000.

This news quickly boosted the company’s stock price, which rose over 24% after hours. On the surface, it appears to be another round of “downsizing” in the tech industry, but a deeper analysis of Block’s financial situation reveals that this is not due to financial distress, but a strategic move to embrace AI for efficiency improvements.

However, if we use the framework of the recent highly discussed article “The Global Intelligent Crisis of 2028” to examine this event, it may signal broader economic risks: AI replacing human intelligence could trigger chain reactions, leading to employment crises and a collapse of consumer economies.

Block’s Financial Status: Strong Growth and Profitability Enhancement

Block’s financial performance can be described as “steady and optimistic.” According to the latest Q4 2025 earnings report, the company achieved an adjusted EPS of $0.65, with revenue reaching $6.25 billion, and gross profit up 24% year-over-year to $2.87 billion. For the full year, gross profit exceeded $10.36 billion, a 17% increase, driven by its core businesses—Square payment platform, Cash App mobile wallet, and Afterpay installment services. The company also performed well in Bitcoin revenue, with nearly $2 billion in Q3, accounting for one-third of total revenue.

Looking ahead to 2026, Block’s management further raised their performance outlook: gross profit is expected to reach $12.2 billion, up 18%; adjusted operating income of $3.2 billion with a profit margin of 26%; adjusted EPS of $3.66, a 54% increase.

These figures far exceed analyst consensus forecasts, demonstrating the company’s confidence in future growth. The company maintains ample liquidity, ending the year with $9.2 billion in cash reserves, and continues share repurchases (buying back 11.9 million shares in Q4, worth $790 million). Overall, Block is not under financial pressure; instead, it is in a phase of accelerating profitability, with full-year 2025 profits reaching $1.3 billion.

From a business structure perspective, Block’s growth engine mainly relies on expanding digital payments and financial services. Cash App’s user activity exceeded expectations, and Square’s merchant tools remain dominant in the small business market. These factors support the company’s high valuation, despite a 16% stock decline over the past year. The positive market reaction to the layoffs indicates investor approval of cost optimization.

Why Lay Off Nearly Half the Staff? The AI-Driven Efficiency Revolution

Despite strong financials, Block chose to significantly cut its workforce. This is not an isolated case but a reflection of the AI transformation wave sweeping the tech industry.

Block CEO Jack Dorsey explicitly stated in a shareholder letter: “Smart tools are changing the way companies build and operate. We see this internally. A smaller team, using the tools we are building, can do more and better. And the capabilities of these smart tools are accelerating every week.” CFO Amrita Ahuja added that the layoffs aim to “operate with a smaller, more efficient team, automating more tasks with AI to move faster.”

Essentially, this layoff marks Block’s shift from a traditional labor-intensive model to an AI-native structure. The company expects this move to generate restructuring costs of $450 million to $500 million, mainly for severance and accelerated equity vesting, but in the long run, it will significantly reduce operating costs and improve profit margins.

Dorsey even predicts that most companies will follow suit within a year, as AI adoption will reshape the workforce structure. This aligns closely with Block’s business: as a fintech company, it can optimize payment processing, risk assessment, and customer service through AI, reducing reliance on human labor.

From a broader industry perspective, this layoff reflects AI’s penetration into white-collar jobs. Block is not the first tech giant to act this way—Elon Musk’s Tesla and Meta have also achieved efficiency gains through AI-driven streamlining. But Block’s scale—cutting nearly half its employees—makes it a landmark case, signaling that AI may accelerate the arrival of a “frictionless” economy.

When “The Global Intelligent Crisis of 2028” Plays Out Early: Potential Macroeconomic Risks Seen in Block’s Layoffs

While the layoffs seem like a positive strategic adjustment from Block’s perspective, using the framework of Citrini Research’s February 2026 article “The Global Intelligent Crisis of 2028,” we might see this as just the tip of the iceberg. The article is a hypothetical thought experiment that revisits an AI-induced economic crisis from the perspective of 2028, centered on the “AI Efficiency Paradox”: if AI’s optimistic potential is fully realized, it could actually trigger disaster.

The article suggests that AI agents will massively replace white-collar jobs, eroding the “intelligent premium.” Middle-class income sources—jobs relying on knowledge and judgment—will be automated away, creating a “smart displacement spiral”: companies adopt AI to boost productivity, leading to more layoffs; unemployed consumers reduce spending, squeezing corporate profits; companies further invest in AI to cut costs, causing more unemployment. This ultimately creates a “ghost GDP”: economic output appears to surge on the surface, but machines do not consume, buy homes, or travel, leading to a collapse of the consumer economy, which accounts for 70% of US GDP.

Block’s layoffs align perfectly with this logic. As an early AI adopter, Block has automated tasks like data analysis and customer support, achieving “more with fewer people,” but this also means over 4,000 employees’ incomes are interrupted. If similar actions spread across global tech, finance, and SaaS sectors (such as the predicted collapse of travel platforms and insurance brokers), unemployment could hit the middle class, leading to demand contraction. Since Block’s business depends on consumer activity (e.g., Cash App transfers and Afterpay installments), a sharp decline in consumer income could stall its growth engine.

The article also warns that AI eliminating “business friction”—such as automatic price comparisons and subscription cancellations—will destroy industries reliant on information asymmetry. While Block’s payment ecosystem benefits from AI optimization, widespread consumer AI agents could pressure its fee-based model. An extreme scenario is a stock market crash after an AI bubble burst, with unemployment soaring above 10%. The short-term stock price rise of Block may reflect the “initial prosperity” phase described in the article, but long-term risks are significant. Although this scenario is speculative, its release triggered a sell-off in US stocks, with the Dow dropping 800 points, highlighting market sensitivity to AI downside risks.

Conclusion: AI as a Double-Edged Sword and Human Adaptation

Block’s layoffs demonstrate how AI can drive transformation even in financially strong companies but also serve as a warning.

As “The Global Intelligent Crisis of 2028” warns, if AI replaces human intelligence faster than society can adapt, we may face unprecedented crises. Policymakers should consider universal basic income or retraining programs, and companies like Block need to balance efficiency with social responsibility.

In the era of AI intelligence, each of us must ask: what skills are hard for AI to replicate? Proactively prepare now. When “The Global Intelligent Crisis of 2028” becomes reality, having a unique skill set will be crucial.

Appendix: Jack Dorsey’s Public Letter

Today, we are making one of the most difficult decisions in our company’s history: we will lay off nearly half of our staff, reducing from over 10,000 to fewer than 6,000. Over 4,000 employees will be asked to leave or enter negotiations. I want to honestly share what has happened, why we are doing this, and what it means for everyone.

First, if you are affected, you will receive 20 weeks of salary, plus one week of pay for each year of service, stock options as of May, six months of health insurance, company equipment, and a $5,000 transition allowance to help you through this period (if outside the US, similar support will be provided, though details vary). I want you to understand this first. Whether you are asked to leave, negotiate, or stay, everyone will be informed today.

We are not making this decision because the company is in trouble. Our business is strong, gross profit continues to grow, customer numbers increase, and profitability improves. But circumstances have changed. We see that the smart tools we are developing and using, combined with a smaller, flatter team, are creating a new way of working that fundamentally changes how we build and operate the company—and this trend is accelerating.

I face two choices: gradually lay off staff over months or years, letting the transformation happen naturally; or face the reality head-on and act immediately. I choose the latter. Repeated layoffs would hurt morale, distract us, and damage trust from customers and shareholders. I prefer to take decisive, clear action now, based on what we believe, rather than slowly downsizing and ending up with the same result. A smaller scale also gives us space to develop our business in our own way, rather than constantly reacting to market pressures.

Such a large decision carries risks, but standing still is equally risky. We have thoroughly evaluated and stress-tested the necessary personnel and roles for future stable growth. I admit we may have made mistakes in some areas, and we have built flexibility to address them and ensure we make the right choices for our customers.

We will not suddenly remove anyone from Slack or email, pretending they never existed. Communication channels will remain open until Thursday night (Pacific Time) for everyone to say goodbye and share their thoughts. I will also host a live video at 3:35 PM Pacific to thank everyone. I know this may feel awkward, but I prefer this human, heartfelt approach over a cold, impersonal one.

To those leaving… I thank you and apologize for making you go through this. You built this company, and I will always remember that. This decision does not diminish your contributions; you will be an indispensable part of any organization in the future.

To those staying… this is my decision, and I take responsibility. I hope you will join me in building this company. We will focus on intelligence as the core, shaping everything we do—including how we work, create, and serve our customers. Our clients will feel this change too, as we help them transition smoothly: moving toward a future where they can directly leverage our features, build their own functions through our interface. That is my current focus.