Breaking News:Jack Dorsey Just Fired The Starting Gun On AI Layoffs– What Just Happened

Jack Dorsey did not call it a restructuring. He did not blame macroeconomic headwinds, or say Block was “right-sizing” for a challenging environment. In what may be the most significant AI layoffs announcement to date, he told more than 4,000 employees they were losing their jobs because artificial intelligence had made them unnecessary. And he did it while the company was posting record profits.

“We’re not making this decision because we’re in trouble,” Dorsey wrote in a letter posted publicly on X on Wednesday. “Our business is strong. Gross profit continues to grow, we continue to serve more and more customers, and profitability is improving.”

Block’s Q4 2025 results, released the same day, backed him up. Gross profit grew 24% year-over-year to $2.87 billion. Adjusted earnings per share came in at $0.65, up from $0.47 a year earlier. The company guided for $12.2 billion in gross profit for 2026, an 18% increase. This was not a company in distress. This was a company deciding that 10,000 employees could become 6,000; that AI was the reason.

Wall Street loved it. Block’s stock, which had fallen more than 34% over the prior year to about $52, surged more than 20% in after-hours trading. Billions of dollars in market value materialized the moment Dorsey announced he was eliminating 4,000 jobs. The message to every CEO in America was hard to miss.

The Quiet Part, Out Loud

Corporate layoffs are a familiar ritual. Companies cite “operational efficiency” or “strategic realignment.” They hire consultants, leak the news to the Wall Street Journal, and post a carefully worded blog post. What Dorsey did was different. He named artificial intelligence directly, called it a permanent structural shift, and said most of his peers were already behind.

“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 wrote. “And that’s accelerating rapidly.”

This was Block’s fourth round of cuts since late 2023. The company trimmed 8% of staff that year, cut roughly 1,000 more in January 2024, and eliminated another 931 positions in March 2025. Those earlier rounds followed the standard playbook: quiet announcements, vague rationale, no mention of AI. This time, Dorsey went the other direction. He said the quiet part out loud.

Block, with its “intelligence tools” language and its four rounds of shrinking headcount, has yet to show publicly how much of its AI bet has actually paid off in measurable output.

The Dorsey Paradox

Dorsey is a strange choice for efficiency evangelist. He has spent the better part of two decades building companies that were, by most accounts, overstaffed.

Twitter had roughly 7,500 employees when Elon Musk acquired it in October 2022. Musk cut about 80% of the workforce within six months, eventually reducing it to approximately 1,300 employees (fewer than 550 of them engineers, according to CNBC). The platform kept running. The lights stayed on. Dorsey himself acknowledged as much at the time. “I own the responsibility for why everyone is in this situation: I grew the company size too quickly,” he wrote on Twitter in November 2022. “I apologize for that.”

Then he went back to Block and kept hiring. The company grew from 5,477 employees in 2020 to 12,985 by the end of 2023, a 137% increase in three years. He built the same bloat he had just apologized for, at a company he was running simultaneously.

The pattern is hard to ignore: grow fast, accumulate headcount, then reset. At Twitter, Musk forced the reset. At Block, Dorsey is doing it voluntarily and using AI as the justification that Musk never needed.

The Market Prices Humans As Liabilities

The stock reaction to Block’s layoffs was the kind of signal that shapes corporate strategy. A company announced it was firing 40% of its workforce, and investors added billions in market value within hours.

“Firing 4,000 people and the stock rips 18%. The market is literally pricing humans as a liability,” one user on X observed. Brian Halligan, co-founder of HubSpot, put it more directly: “Block up 30% after announcing a 40% layoff — ripped off the bandaid. Wow.”

The comparison to Klarna is instructive. CEO Sebastian Siemiatkowski said in 2024 that AI had replaced roughly 700 customer service agents. The company’s headcount fell 40% over two years as part of a broader restructuring. The market cheered. Then quality dropped and Klarna began rehiring. Block’s cuts are at a different scale, more than 4,000 jobs across all functions, not just customer service. Dorsey is betting the problems that hit Klarna won’t hit him. Whether that’s confidence or hubris will take time to sort out.

What’s already sorted is the incentive structure. AI is reshaping how companies value headcount, and Wall Street is making its preferences clear.

The Cascade

The commentary following Dorsey’s letter was less about Block and more about what comes next.

Balaji Srinivasan called it “the first AI cut” that “will send shockwaves,” urging people to “get good now. Become indispensable. Work nights and weekends. Learn the AI tools and raise your game. Or you might not make the cut.” Matthew Pines, executive director of the Bitcoin Policy Institute, predicted “a highly non-linear cliff in employment this year,” adding that if other CEOs follow suit, “it could cascade. Woosh.”

Duolingo declared itself “AI-first” in April 2025 and cut 10% of its contractors. Amazon eliminated 16,000 positions in early 2026 amid broader AI-driven restructuring. But none of those announcements carried the bluntness of Dorsey’s letter, or came attached to a stock pop visible on every board member’s Bloomberg terminal.

Dan McAteer, a tech commentator, made the distinction that matters: this was “prob the first legitimate layoffs due to AI rather than AI as pretext.”

The Severance Standard

To his credit, Dorsey set a generous floor for how AI-driven layoffs should be handled. Affected employees will receive 20 weeks of salary plus one week per year of tenure, equity vested through the end of May, six months of healthcare, their corporate devices, and a $5,000 transition stipend. Block disclosed expected restructuring charges of $450 to $500 million in its SEC filing.

Dorsey also kept internal communication channels open through Thursday evening so employees could say goodbye. “We’re not going to just disappear people from Slack and email and pretend they were never here,” he wrote. “I’d rather it feel awkward and human than efficient and cold.”

It also set a standard that most companies are unlikely to match when they make similar cuts. The template Dorsey created is generous. The copies probably won’t be.

What Comes Next For AI Layoffs

Dorsey closed his letter by asking the remaining 6,000 employees to “build with me.” He outlined a future where Block operates with “intelligence at the core of everything we do,” where customers can eventually “build their own features directly, composed of our capabilities and served through our interfaces.”

It’s an uncomfortable vision for the people being asked to stay. If AI made 4,000 of their colleagues unnecessary today, the math for tomorrow isn’t hard to do. Dorsey himself wrote that the capabilities of these intelligence tools are “accelerating rapidly.”

He fired the starting gun. The question is no longer whether AI will replace white-collar jobs at scale, but how fast the rest of corporate America follows Block’s lead, and whether the severance packages will still look this good when they do.