Block to lay off more than 4,000 employees to refocus on AI

The financial technology company Block announced the layoff of more than 4,000 workers - out of a workforce of more than 10,000 - as part of a restructuring aimed at bolstering the use of artificial intelligence (AI), a decision that boosted its shares more than 20% in pre-market trading Friday.

The move was communicated by its chief executive and co-founder, Jack Dorsey, in a letter to shareholders in which he argued that "intelligence tools" have transformed the way companies are created and run.

"The central thesis is simple. The intelligence tools have transformed the concept of building and running a company," Dorsey wrote. "A significantly smaller team, with the tools we are developing, can do more and do it better," he added.

Block is the parent company of digital payment platforms such as Square and Cash App. The executive's comments, which explicitly mention the AI as a key factor in the cuts, were also posted on X, a social network he co-founded.

Market reaction

Block's shares had risen 5% on Thursday, to $54.53, ahead of the release of its quarterly results. Following the announcement and the release of its financial figures, they soared to nearly $69 in post-closing trading.

The company reported that its fourth-quarter gross profit increased 24% year-on-year. Analysts said the promise of higher levels of efficiency and profitability through intensive AI adoption whetted investor appetite.

"For years we have debated whether AI would marginally reduce employment. Now we have a public case study where the CEO explicitly states that intelligence tools have changed the meaning of building and running a company," said Stephen Innes of SPI Asset Management, in a commentary quoted by AP.

Trend in the tech sector

Block, founded in 2009 and based in San Francisco, operates in the United States, Canada, parts of Europe, Australia and Japan. The company indicated that it will offer support to the laid-off employees, although conditions will vary overseas. It did not specify which areas or locations will be most affected.

The announcement adds to a wave of cutbacks at large U.S. corporations in recent months. Among the companies reporting recent layoffs are Amazon, UPS, Dow and The Washington Post.

Although some companies have downplayed the relationship between workforce adjustments and artificial intelligence, Block's case stands out for directly linking its downsizing strategy to the deployment of these technologies.