Topline
Billionaire Jack Dorsey’s Block surged in premarket trading on Friday, after he announced the financial tech firm would cut its workforce nearly in half as he anticipates AI to increase efficiency, leading companies to reduce headcount.
Dorsey said he expects other companies to reduce their workforces as “intelligence tools” increase efficiency.
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Key Facts
Shares of Block soared 19.3% in premarket trading to just over $65, pacing what would be the stock’s largest intraday gain since February 2022 (26.1%).
Block—owner of online payment apps Cash App, Square, Afterpay and more—on Thursday reported 24% year-over-year growth in gross profits to $2.87 billion, fueled by 33% growth in Cash App’s gross profit to $1.83 billion.
Dorsey, in a letter to shareholders as part of Block’s quarterly earnings report, said the company would cut more than 4,000 employees, reducing the company’s workforce by nearly half.
“Intelligence tools have changed what it means to build andrun a company,” Dorsey said, adding a “significantly smaller team” can “do more and do it better” by using tools the company has built, while “intelligence tool capabilities are compounding faster every week.”
Dorsey said he believed companies that have yet to reduce their headcount as AI increases workforce efficiency are “late,” and that he believes a “majority of companies” will make similar structural changes.
Big Number
11.7%. That’s how much of the U.S. labor market could be replaced by AI, or about $1.2 trillion in wages across finance, health care and professional services, according to a study released in November by the Massachusetts Institute of Technology.
Forbes Valuation
Dorsey, who cofounded Block—formerly known as Square—in 2009 with Jim McKelvey, has an estimated net worth of $5.5 billion, ranking him the 769th-richest person in the world. He cofounded Twitter in 2006 with Ev Williams, Biz Stone and Noah Glass, serving as CEO until 2008 and then again from 2015 to 2021, later stepping down as board member in 2022 before Elon Musk purchased the company for $44 billion. Musk ranks as the richest person in the world with a fortune estimated at $842.9 billion.
Key Background
Concerns that AI could soon replace jobs across dozens of industries have swirled as the technology has advanced rapidly over the last year. Earlier this month, global software stocks were rattled after Anthropic announced its Claude chatbot could automate tasks across customer service, finance and legal. Experts have argued that, while AI may increase efficiency, the technology will likely complement the workforce, not take away from it. Several companies have already reduced their headcount because of AI, including Klarna, which reduced its workforce by 40% between December 2022 and December 2024 as it ramped up AI investments.