In partnership with

When AI Becomes the Workforce

For the past two years, the tech world has argued about one question: Will artificial intelligence actually replace jobs, or is it simply being used as a justification for layoffs?

This week, fintech giant Block may have delivered the clearest answer yet.

Jack Dorsey, co-founder and CEO of the company behind Square and Cash App, announced a dramatic shift in how the company plans to operate going forward. Block will cut about 40% of its workforce, shrinking from more than 10,000 employees to just under 6,000.

But what made the announcement stand out was not just the scale of the cuts.

It was the reason.

Dorsey openly linked the layoffs to the rapid advancement of AI-powered “intelligence tools,” arguing that these technologies have fundamentally changed what it takes to build and run a modern company.

And according to him, Block may simply be the first mover.

The AI Efficiency Era

In a message to investors and employees, Dorsey emphasized that the layoffs were not a reaction to financial trouble.

In fact, quite the opposite.

Block’s business remains strong. Gross profit is rising, the company continues to add customers, and profitability is improving.

Yet something has shifted beneath the surface.

According to Dorsey, new AI systems have dramatically increased the productivity of teams. Tasks that previously required large engineering groups can now be handled by far fewer people using advanced software tools.

His conclusion was blunt: companies can operate with much smaller teams while maintaining or even improving output.

Dorsey also suggested that the broader corporate world will soon arrive at the same realization. In his view, many businesses could reach similar conclusions about AI-driven efficiency within the next year.

If that happens, the implications for hiring across tech and fintech could be massive.

Attio is the AI CRM for modern teams.

Connect your email and calendar, and Attio instantly builds your CRM. Every contact, every company, every conversation, all organized in one place.

Then Ask Attio anything:

• Prep for meetings in seconds with full context from across your business

• Know what’s happening across your entire pipeline instantly

• Spot deals going sideways before they do

No more digging and no more data entry. Just answers.

Start your free trial →

Investors Love the Strategy

Wall Street reacted immediately.

Following the announcement, Block’s stock jumped about 25% in extended trading, before settling with a roughly 17% gain by Friday’s close.

The market reaction reflects a growing belief among investors that AI-driven efficiency could significantly boost profitability for technology companies.

Several major banks quickly voiced support.

Morgan Stanley upgraded Block’s stock, highlighting how AI tools could streamline operations and improve margins. Goldman Sachs also raised its price target, noting that the layoffs could push Block from the middle tier of fintech companies to near the top in terms of workforce productivity.

Wells Fargo echoed the optimism, describing the company’s latest quarter as “chock full of positive surprise.”

At the same time, Block also issued an earnings forecast that comfortably beat analyst expectations.

In other words, the layoffs were not viewed as a defensive move.

They were seen as a strategic shift.

One Big Cut Instead of Many

The layoffs will not happen gradually.

Instead, Block plans to complete most of the restructuring by mid-year, taking a one-time restructuring charge estimated between $450 million and $500 million.

Dorsey said the company intentionally chose to execute the cuts in a single wave rather than multiple rounds.

Repeated layoffs, he argued, can damage company culture and erode trust among employees, customers, and investors.

By making the changes all at once, Block hopes to quickly reset the organization and move forward with a leaner structure.

A New Productivity Benchmark

One number from Block’s announcement stood out.

The company is targeting more than $2 million in gross profit per employee.

That figure is roughly four times higher than Block’s productivity level before the pandemic.

The shift illustrates how dramatically expectations around efficiency are changing across the tech sector.

Traditionally, fast-growing tech companies prioritized hiring aggressively to fuel expansion.

Now the focus is moving toward maximizing output per employee, particularly as AI tools handle more routine development work.

Interestingly, analysts believe many of the layoffs are concentrated in engineering roles, while revenue-generating and regulatory positions remain largely intact.

That detail hints at how Block plans to use its internal AI platform, called Goose, to replace certain types of technical work.

The Wider AI Jobs Debate

Block’s decision lands in the middle of a growing debate across Wall Street and Silicon Valley.

Some believe AI will simply act as a productivity enhancer, helping workers accomplish more without eliminating large numbers of jobs.

Others argue that AI could fundamentally reshape white-collar employment.

Earlier this week, a report from Citrini Research captured widespread attention online with a hypothetical scenario titled “The 2028 Global Intelligence Crisis.”

The thought experiment imagined a near future where widespread AI-driven layoffs among white-collar workers trigger a broader economic slowdown. As displaced workers cut spending, consumer demand falls, eventually causing financial instability.

While critics pushed back on the scenario, one part of the argument is difficult to ignore.

If AI layoffs are going to happen at scale, they would likely start at successful, profitable technology companies that have both the tools and the incentive to automate.

Block may now represent the first real-world test of that theory.

The Efficiency Race Is Already Starting

The ripple effects are already visible elsewhere in the tech industry.

Companies including Pinterest, CrowdStrike, and Chegg have all recently announced smaller layoffs tied in part to AI efficiency gains.

Executives across the sector are increasingly discussing a new metric that could define the next phase of technology companies: revenue per employee.

Autodesk CEO Andrew Anagnost recently said that improving efficiency through AI is now a key focus for management teams.

He noted that engineering productivity is already increasing as developers use AI tools to write code faster and automate repetitive tasks.

The result?

Companies may simply need fewer engineers to build the same products.

Autodesk expects to slow hiring for precisely that reason.

A Turning Point for Fintech?

Block’s decision could mark a turning point for fintech companies.

For years, fintech startups expanded rapidly, hiring large teams in pursuit of growth and innovation.

But if AI tools significantly improve productivity, the economics of scaling a fintech company could look very different.

Smaller teams might build platforms that previously required thousands of employees.

Operating margins could improve dramatically.

And hiring strategies across the sector may shift toward leaner, AI-augmented teams rather than large workforces.

For now, the market appears to be rewarding that shift.

But the broader consequences for workers and the economy remain uncertain.

What is clear is that the AI debate is no longer theoretical.

It has officially arrived in the fintech industry.