Major financial services corporation cuts nearly half its workforce after adopting AI systems

As artificial intelligence (AI) tools become more embedded in corporate operations, some technology companies are reducing staff and restructuring teams, saying productivity gains allow them to operate more efficiently.

Block, the parent company of Square, Cash App, and Afterpay, said Feb. 26 it will eliminate more than 4,000 positions, reducing its workforce from more than 10,000 employees to just under 6,000. CEO Jack Dorsey directly tied the cuts of “nearly half” his staff to his company’s adoption of advanced artificial intelligence.

“We’re already seeing that 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 in a letter to employees and shareholders posted on X. “And that’s accelerating rapidly.”

Dorsey said the company is not facing the problems normally associated with layoffs. 

“We’re not making this decision because we’re in trouble. Our business is strong … but something has changed,” he wrote, adding that “many companies will have to make similar moves due to AI.”

Block has developed internal AI tools, including an open-source system known as Goose. Company officials say engineers have reported saving eight to 10 hours per week on routine tasks, with productivity per engineer rising more than 40% in recent months. The company said it will continue hiring selectively in senior AI engineering and related roles.

Other layoffs in the tech sector

Block’s elimination of more than 4,000 positions ranks among the largest workforce cuts publicly linked by a company to AI-driven productivity gains and comes as other technology companies have already begun referencing AI in their own workforce reductions.

Amazon CEO Andy Jassy said in June 2025 that the efficiency gains from AI would likely lead to a smaller corporate workforce for the company over time. Amazon, Pinterest, CrowdStrike, and Chegg have recently cited AI as a factor in job reductions or reorganizations.

AI-related restructuring accounted for roughly 55,000 U.S. tech job cuts in 2025 – about 28% of global tech layoffs that year – according to industry data. More than 49,000 technology jobs have been eliminated worldwide in the first two months of 2026, according to workforce tracker TrueUp.io.

Some tech investors and executives have described the shift as an early sign of broader changes to white-collar employment.

Balaji Srinivasan, a venture capitalist and former chief technology officer at Coinbase, called Block’s move “the first AI cut” in a post on X. He described displaced workers as a “temporarily unfortunate class” and urged tech employees to adapt, writing: “Get good now.” He also pointed to companies such as Stripe, Shopify, and Coinbase as early adopters of AI-driven workflows.

Political commentator Krystal Ball warned that other companies will likely follow suit after Block’s decision, writing in an X post: “Block just cut 40% of their workforce because of AI and were rewarded with a massive stock surge. Other companies are going to want to recreate this. Job loss could get very ugly, very quick.” 

However, some economists caution that it remains difficult to separate layoffs directly caused by AI automation from broader cost-cutting and restructuring trends in the sector.

Uneven impact across job levels

Analysts say the effects appear uneven, as demand for junior- and entry-level roles involving routine coding, administrative work, basic content production, and customer service has softened at some firms but companies continue to recruit senior engineers and AI specialists to build and manage the technology.

U.S. unemployment still remains relatively low, and broad economy-wide displacement directly attributed to AI has not yet appeared in official labor data.

Economists remain divided over the long-term effects of AI in the workforce. Some say AI could increase productivity and create new categories of work, while others warn that rapid adoption could squeeze out certain white-collar occupations if efficiency gains translate into sustained hiring slowdowns.

OpenAI CEO Sam Altman has said AI will cause “real displacement” in some tasks, while cautioning that companies may overstate the technology’s role in workforce decisions.

Block’s severance and transition

Dorsey said affected employees will receive severance package that includes at least 20 weeks of pay, additional compensation based on tenure, extended health benefits, and vested equity. Dorsey said the company opted for a single large reduction rather than incremental cuts to limit prolonged uncertainty.