Jack Dorsey lays off 40% of Block because of AI and sees most firms making similar cuts in next year

These threats have caused many professional workers’ stomachs to churn as they fear for their heads. Now, Jack Dorsey’s payments firm Block has made a move that vindicates some of the fears of the AI doomers.

The Block founder announced Thursday the company would be laying off nearly half of its workforce, cutting 4,000 employees, down to just under 6,000 workers from over 10,000.

Dorsey didn’t mince words in an X post announcing the cuts, tying the layoffs directly to an efficiency boost from the company’s AI implementation. “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,” he wrote.

Block’s layoffs mark one of the most significant and bold AI-driven workforce reductions yet in S&P 500 history. 

Dorsey added that his company isn’t alone in reaching its conclusion on AI and predicted that others will follow.

“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,” he wrote in a separate letter to shareholders.

While Dorsey noted part of the layoffs were a reaction to overhiring during COVID, the layoffs follow AI-driven doomsday anxiety among workers and investors alike. Citrini’s “Global Intelligence Crisis” Substack post imagined a scenario in 2028 where unemployment tops 10% and the S&P 500 tanks.

But AI layoffs may not be as they appear. A Oxford Economics report released in January found that many layoffs that CEOs claimed were due to AI were actually in reaction to past overhiring.

Where companies stand with AI implementation

Still, some experts warn Block’s layoffs could trigger the reality depicted in Citrini’s viral post, setting in motion a chain reaction of layoffs across the professional landscape.

“Whereas the job market effects of AI in 2025 were still quite ambiguous, AI capabilities have advanced rapidly in the past few months,” Anton Korinek, an economist who focuses on the economic impact of transformative AI, told Fortune. “This may be the beginning of a new trend where white collar jobs become threatened more seriously by AI. Once a few companies start the trend, competitive forces may induce others to follow suit.”

But Dorsey’s statement comes as companies are still in the early stages of AI adoption. A 2025 McKinsey report found that most firms are still experimenting with AI implementation, and nearly two-thirds have yet to scale the technology. Moreover, a recent survey of 6,000 CEOs and other executives of firms across the U.S., U.K., Germany, and Australia from the National Bureau of Economic Research found that AI has yet to show any major impact on their operations. 

Meanwhile, other tech leaders have warned AI will eventually lead to fewer jobs. Amazon CEO Andy Jassy said last year the company would probably need a smaller headcount as AI started to automate tasks. And Salesforce CEO Marc Benioff said he “needs less heads” after reducing the company’s workforce by 4,000 as AI takes over some work. 

Block’s AI operations have paid off

For Block, AI implementation has bolstered the company’s operations. “We’re not making this decision because we’re in trouble,” Dorsey noted in his X post. “Our business is strong.” The company reported a gross profit of $2.87 billion in the fourth quarter, up 24% year over year.

Dorsey also said the company’s customer base is expanding and profitability is improving, which he attributed to AI implementation.

The stock market has reacted positively to the decision. Block was up nearly 18% on Friday as investors bet on productivity gains from AI.

Dorsey said the layoffs come in anticipation of an ensuing trend, allowing the company to act proactively: “I’d rather get there honestly and on our own terms than be forced into it reactively.”