Author: 0xjs@Golden Finance

On February 26, 2026, payment technology giant Block (formerly Square), founded by Twitter co-founder Jack Dorsey, announced a shocking decision to the industry:

To lay off more than 4,000 people, almost half of its total workforce, reducing the team size from over 10,000 to under 6,000.

This news quickly boosted the company's stock price, with an after-hours increase of over 24%. On the surface, this seems like another round of "dieting" in the tech industry, but a closer analysis of Block's financial status reveals that this is not due to financial distress but rather a strategic choice by the company to embrace AI to enhance efficiency.

However, if we borrow the framework from the recently discussed article "2028 Global Intelligence Crisis," this layoff event may signal broader economic risks: the replacement of human intelligence by AI could trigger a chain reaction, leading to an employment crisis and collapse of consumer economies.

Block's Financial Status: Strong Growth and Improved Profitability

Block's financial performance can be described as "robust and optimistic." According to the latest fourth-quarter report for 2025, the company achieved an adjusted earnings per share (EPS) of $0.65, with revenues reaching $6.25 billion and gross profit growing 24% year-on-year to $2.87 billion. For the entire year, gross profit exceeded $10.36 billion, a 17% year-on-year growth, thanks to strong performance in its core businesses—Square payment platform, Cash App mobile wallet, and Afterpay installment payment service. The company also excelled in Bitcoin revenue, with nearly $2 billion in Bitcoin revenue in the third quarter, accounting for one-third of total revenue.

Looking ahead to 2026, Block's management further raised performance expectations: gross profit is expected to reach $12.2 billion, an 18% year-on-year growth; adjusted operating income of $3.2 billion, with a profit margin of 26%; adjusted earnings per share of $3.66, a 54% year-on-year increase.

These figures far exceed analysts' consensus forecasts, indicating the company's confidence in future growth. The company has ample liquidity, holding $9.2 billion in cash reserves at the end of the year, and continues its stock buyback (with 11.9 million shares repurchased in the fourth quarter, worth $790 million). Overall, Block is not under financial pressure; rather, it is in a phase of accelerating profitability, with a full-year profit of $1.3 billion in 2025.

From a business structure perspective, Block's growth engine mainly relies on the expansion of digital payments and financial services. Cash App's user activity exceeded expectations, while Square's merchant tools maintain a leading position in the small business market. These factors support the company's high valuation; although the stock price has fallen 16% in the past year, the market reacted positively to the layoff announcement, reflecting investors' recognition of cost optimization.

Why Lay Off Nearly Half the Employees? AI-Driven Efficiency Revolution

Despite bright financial data, Block chose to make significant layoffs, which is not an isolated case but rather a microcosm of the AI transformation wave in the tech industry.

Block CEO Jack Dorsey explicitly stated in a letter to shareholders: "Smart tools are changing the way companies are built and operated. We have seen this internally. A smaller team, using the tools we are building, can do more and do it better. And the capabilities of smart tools are accelerating weekly." CFO Amrita Ahuja added that the layoffs aim to "automate more work with a smaller, more efficient team using AI, allowing us to act faster."

Essentially, these layoffs represent Block's transition from a traditional labor-intensive model to an AI-native structure. The company expects this move will incur restructuring costs of $450 million to $500 million, primarily for severance and accelerated equity vesting, but in the long run, will significantly reduce operating costs and enhance profit margins.

Dorsey even predicts that most companies will follow suit within a year, as the adoption of AI will reshape the workforce structure. This aligns closely with Block's business: as a fintech company, it can optimize payment processing, risk assessment, and customer service through AI, reducing reliance on human labor.

From a broader industry perspective, this layoff reflects the penetration of AI into white-collar jobs. Block is not the first tech giant to take such action—similarly, Elon Musk's Tesla and Meta have also achieved efficiency leaps through AI-driven streamlining. But Block's scale (nearly half the employees) makes it a landmark case, signaling that AI may accelerate the arrival of a "frictionless" economy.

When the "2028 Global Intelligence Crisis" Unfolds Early: Potential Macro Risks from Block Layoffs

From the perspective of Block's individual case, these layoffs seem to be a positive strategic adjustment. However, if we borrow the framework from Citrini Research's article published in February 2026, "2028 Global Intelligence Crisis," we may find that this could be just the tip of the iceberg. The article is a hypothetical thought experiment that reviews the economic crisis triggered by AI from the perspective of 2028, centered around the "AI Efficiency Paradox": if the optimistic expectations of AI are fully realized, it could lead to disaster.

The article posits that AI agents will massively replace white-collar jobs, leading to the disappearance of the "intelligence premium." The income sources of the middle class—jobs reliant on knowledge and judgment—will be automated away, resulting in an "intelligence replacement spiral": businesses adopt AI to improve productivity, layoffs increase; unemployment reduces consumption, squeezing corporate profits; companies further invest in AI to lower costs, leading to more unemployment. This ultimately creates "phantom GDP": the economic output appears to surge, but machines do not consume, do not buy homes, or travel, leading to the collapse of the consumer economy, which accounts for 70% of U.S. GDP.

Block's layoffs align perfectly with this logic. As an early adopter of AI, Block achieved "smaller teams doing more" through automating work (such as data analysis and customer support), but this also means disruption of income for over 4,000 employees. If similar actions spread throughout the global tech, finance, and SaaS industries (as predicted in the article regarding travel platforms and insurance intermediaries collapsing), the wave of unemployment will impact the middle class, triggering demand shrinkage. Block’s own business relies on consumption (such as transfers through Cash App and installments via Afterpay); if consumer income sharply declines, its growth engine will stall as well.

The article also warns that AI's elimination of "business friction" (such as automatic price comparison and subscription cancellations) will destroy industries that rely on information asymmetry. While Block's payment ecosystem benefits from AI optimization, if consumer AI agents become widespread, its fee structure may face pressure. A more extreme scenario is that the stock market crashes after the AI bubble bursts, with unemployment rising above 10%. The short-term rise in Block's stock price may be the "initial prosperity" phase described in the article, but the long-term risks cannot be ignored. Although this piece is a scenario projection, it prompted a sell-off in U.S. stocks post-publication, with the Dow Jones Index falling 800 points, highlighting the market's sensitivity to AI's downside risks.

Conclusion: The Double-Edged Sword of AI and Human Adaptation

Block's layoff incident showcases how AI can drive change in a financially strong company, but it also sounds an alarm.

As warned in the "2028 Global Intelligence Crisis," if the speed of AI replacing human intelligence surpasses society's ability to adapt, we may face an unprecedented crisis. Policymakers need to consider universal basic income or retraining programs, while companies like Block should balance efficiency with social responsibility.

In the face of the intelligent AI era, each of us must ask ourselves: what will we do in the future?

Which skills are difficult for AI to replicate? Be proactive in preparing in advance. When the "2028 Global Intelligence Crisis" becomes a reality, having a skill in hand will be invaluable.

Attached is Jack Dorsey's open letter:

Today, we will make one of the toughest decisions in the company's history: we will lay off nearly half, reducing our workforce from over 10,000 to under 6,000. This means that more than 4,000 employees will be asked to leave or enter negotiations. I will honestly tell you what has happened, why we are doing this, and what it means for everyone.

First, if you are one of the affected employees, you will receive 20 weeks of pay, plus 1 week of pay for each year of service, stock options vesting until the end of May, 6 months of health insurance, your company equipment, and a transition allowance of $5,000 to help you through this transition period (if you are outside the U.S., you will receive similar support, but specifics will vary according to local regulations). I want you to know this first. Whether you are being asked to leave, enter negotiation, or invited to stay, everyone will be informed today.

We are making this decision not because the company is in trouble. Our business is thriving, gross profits continue to grow, the number of customers keeps increasing, and profitability is on the rise. But the situation has changed. We have seen that the smart tools we are developing and using, combined with a smaller, flatter team, are giving rise to a fundamentally new way of working. Moreover, this trend is rapidly evolving.

I faced two choices: either to gradually lay off people over the months or years and let this transition happen naturally; or to face the situation honestly and take immediate action. I chose the latter. Continuous layoffs would harm morale, distract attention, and undermine customer and shareholder confidence in our leadership. I would rather take decisive and clear action now, from a position we firmly believe in, rather than slowly laying people off only to arrive at the same outcome. A smaller company also gives us the space to grow the business our way rather than continuously responding to market pressures.

Such a large-scale decision certainly carries risks, but standing still is also full of risks. We have conducted a comprehensive assessment, identified the personnel and positions needed for stable growth in the future, and stress-tested these decisions from multiple angles. I acknowledge that we may have made mistakes in some areas, and we have allowed for flexibility to address these mistakes and ensure the right choices for our clients.

We will not suddenly remove anyone from Slack or email, pretending they never existed. Channels of communication will remain open until Thursday evening (Pacific Time) so that everyone can say their goodbyes and share anything they want to say. I will also host a live video at 3:35 PM Pacific Time to express my gratitude. I know doing this may feel a bit awkward. But I would rather do it this slightly awkward but humane way than appear cold and inefficient.

To those who are about to leave... I thank you, and I apologize for having you go through this. You built the company we have today, and I will always remember that. This decision does not negate your contributions, and you will be an integral part of any organization you join in the future.

To those who remain... this is my decision, and I accept responsibility for it. I hope you will join me in building this company together. We will create this company with intelligence at its core, permeating everything we do, including how we work, create, and serve our customers. Our clients will also feel this transition, and we will help them transition smoothly: moving toward a future where they can leverage our features directly and build their own features through our interface. This is what I am focusing on now.

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