New York, Feb 27, 2026, 05:04 EST — Premarket
- Shares of Block jumped roughly 20% before the bell after the company announced plans to eliminate over 4,000 positions as part of its AI restructuring.
- The payments company now sees Q1 gross profit growing 22%, while also raising its outlook for 2026.
- Traders want to see if the rally sticks after the open—and just how fast those cost savings start hitting the results.
Shares of Block surged roughly 20% before the bell Friday, propelled by the company’s announcement to slash over 4,000 positions and shift focus toward artificial intelligence. The stock traded near $65.49, climbing $10.96 from its Thursday close. 1
What’s different this time: the company’s layoffs are being pitched as an AI-driven shift, not a reaction to weak demand, and that’s catching investor attention as appetite for margin-boosting stories grows. The timing puts fresh fuel on the old market debate — is “efficiency” just code for job cuts?
Block, the parent behind Square and Cash App, is looking at a reset of its own. Investors have been pressing the company to show more convincing evidence that momentum in its consumer and seller businesses will deliver consistent profit, rather than just sporadic revenue spikes.
Jack Dorsey, Block’s chief executive, said the company will slim its workforce from above 10,000 to just under 6,000, betting on AI to streamline how it runs. Block anticipates $450 million to $500 million in restructuring costs. Evercore ISI analysts labeled the move a “seminal moment” for the AI era; Truist flagged optimism for 2026 margins beating forecasts. 2
Alongside layoffs, Block posted quarterly results that pointed to continued strength in its main operations. The company turned in adjusted earnings of 65 cents a share for the December quarter, while gross profit climbed 24%. Cash App remained the key driver once more.
Block’s shareholder letter put quarterly gross profit at $2.87 billion, with Cash App’s slice up 33% to $1.83 billion. Square gross profit increased 7% to $993 million. Looking ahead, Block is calling for first-quarter gross profit of $2.80 billion, up 22% from a year earlier, and expects adjusted operating income — which leaves out some charges — at $600 million. The company is also targeting $12.20 billion in gross profit and $3.20 billion in adjusted operating income for 2026. First-quarter results are set to drop May 7 after the bell. 3
Block expects the shake-up to start making a clearer dent in adjusted operating income by the second quarter, and says profitability will get a bigger boost from the new cost structure in the second half. For now, that timeline probably hangs over the stock for months.
Block’s stock closed up 5% at $54.53 ahead of the earnings report, then surged further after hours. “For years, we have debated whether AI would dent jobs at the margin,” said Stephen Innes of SPI Asset Management. He noted Block as one of the few public cases where a CEO made AI central to the layoff explanation. 4
For some investors, the rally is simply a matter of cost-cutting—nothing more. But for others, it’s a signal: signs of the “AI boom” are starting to appear in hiring choices at companies that deal directly with consumers, not just in chip demand or cloud spending.
The risk goes both directions. Moving fast to cut staff can disrupt product development and unsettle teams, while hefty restructuring charges sometimes worry investors if the cost savings take time to show up. If consumers pull back on spending, that’s more trouble for payment flows and loan growth.
Now traders are watching to see if Block hangs onto those premarket gains once the bell rings, and if management actually delivers on the margin improvement they’ve talked up—without tripping up Cash App or Square in the process. The next big date is May 7, when Block drops its first-quarter numbers.
