Block In Blockbuster Rally Despite Big Job Cuts, Stock Jumps 25%; Could AI Spark Major Tech Layoffs?

Block, which is backed by former Twitter CEO, Jack Dorsey, has decided to slash its workforce by 40%. This will reduce its headcount to just 6,000 from 10,000 people. Hence, 4,000 people or more are likely to lose their jobs at Block. The reason? It's neither the company's growth or profits, but artificial intelligence (AI), something that has caused terror for employees and tech players both in India and globally. Dorsey warns that more companies will follow the same pattern. Is AI really going to lead to mass tech layoffs going ahead?

Block Share Price:

The news of mass layoffs did not affect Block's stock price even for the slightest. After closing hours of February 26, Block stock surged by over 24% to close around $67.66 per piece.

The blockbuster performance is despite one of the company's biggest layoffs.

Why is Block Cutting 4,000 Jobs?

In his post at X, Dorsey said, "today we're making one of the hardest decisions in the history of our company: we're reducing our organization by nearly half, from over 10,000 people to just under 6,000. that means over 4,000 of you are being asked to leave or entering into consultation. i'll be straight about what's happening, why, and what it means for everyone."

As of December 2025, Block had reported a headcount of 10,205 employees globally.

Why? According to Dorsey, the layoff is not because the company is in trouble. He said, "our business is strong. gross profit continues to grow, we continue to serve more and more customers, and profitability is improving."

But somethings have changed. He added, "we're already seeing that the intelligence tools we're creating and using, paired with smaller and flatter teams, are enabling a new way of working which fundamentally changes what it means to build and run a company." Dorsey says, this is accelerating rapidly.

Hence, Dorsey said Block had two options. Firstly to cut jobs gradually over the months or years. But he went for the second option, which included acting on it now!

"I chose the latter. repeated rounds of cuts are 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, "said Dorsey.

What Will Happen To Employees Who Are Asked To Leave Block?

Dorsey emphasized that the people who will be affected will receive their salary for 20 weeks along with 1 week per year of their tenure. This will be coupled with equity vested through the end of May, 6 months of health care and their corporate devices. The company will also give $5,000 to help the employees during the transition.

These benefits will be given even if you're an employee working outside the US. However, details could vary depending upon local requirements.

Will AI Push More Tech Layoffs?

Apart from dropping the bombshell of cutting their own workforce, Dorsey predicts more companies will follow suit. He said, "Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes," he said. "I'd rather get there honestly and on our own terms than be forced into it reactively."

In India, tech players have already started to face the heat of AI disruption risks. In mid of February, Vinod Nair, Head of Research Geojit Investments said, "AI is creating a structural shift in Indian IT services by reducing timelines and automating tasks, putting pressure on the traditional headcount-based outsourcing model. Layoffs are likely in routine-heavy areas as fewer people will be needed to deliver the same outcomes."

According to Nair, even ERP implementation, as highlighted by Palantir's recent focus, is now vulnerable to AI disruption. Clients are shifting toward outcome-based pricing.

Hence, the analyst believes in the coming quarters, AI adoption could create headwinds for deal wins, potentially impacting topline, making close monitoring of deal flow essential to assess its real impact.

Tech Layoffs:

Data from Trueup, who tracks tech layoffs globally, revealed that in less than 2 months of 2026, 130 tech companies have cumulatively laid off 49,318 people. On an average, 850 people are let go per day.

Last year, 783 companies laid off 245,953 employees.