Rises 23% on AI-Driven Restructuring Plan

Block (XYZ) closed at $54.53, up 4.99% in regular trading, before surging over 23% in pre-market action to $67. The sharp move followed a sweeping restructuring announcement and a stronger 2026 outlook. Why did investors respond so aggressively?

The answer combines cost cuts, artificial intelligence, and higher profit targets.

A Bold Bet on Artificial Intelligence

Block, Inc. announced plans to eliminate more than 4,000 roles, reducing headcount from over 10,000 employees to fewer than 6,000. The reduction represents nearly 40% of its workforce.

Jack Dorsey described the decision as one of the hardest in the company’s history. He framed the move as a strategic shift driven by artificial intelligence tools that automate work and change how companies operate.

He stated that AI enables a new way of building and running organizations. That shift, he explained, requires a leaner structure. The company aims to streamline operations while maintaining product development investments.

Restructuring often creates uncertainty. Yet investors appeared to focus on margin expansion and long-term efficiency. Could leaner operations accelerate profitability?

Strong 2026 Targets Lift Sentiment

Block projected 2026 gross profit of about $12.2 billion and adjusted earnings per share of $3.66. Both figures exceed targets shared during its prior investor day.

Management also forecast first-quarter gross profit of roughly $2.8 billion and adjusted EPS of $0.67. For the full year 2026, the company expects gross profit growth of 18% and adjusted operating income of $3.20 billion, reflecting a 26% margin.

These projections signal confidence in operating leverage. Investors often reward companies that combine revenue growth with disciplined cost control. In this case, the restructuring plan reinforces that message.

However, execution remains critical. Workforce reductions on this scale require careful management to avoid operational disruption.

Fourth-Quarter Results Show Platform Momentum

In the fourth quarter, Block reported gross profit of $2.87 billion, marking a 24% increase from a year earlier. Adjusted earnings per share reached $0.65, in line with analyst estimates. Revenue came in at $6.25 billion, slightly above expectations.

Source: X

The company attributed growth to expansion within its Cash App consumer platform and steady performance in its seller payments ecosystem. Monthly active users on Cash App reached 59 million during the quarter. Meanwhile, payment volume in the seller segment increased about 10% year over year.

Block, which operates Cash App and Square, also reported improved forward visibility tied to platform adoption. That backlog may support revenue stability in upcoming quarters.

Yet questions remain. Can AI-driven efficiencies offset potential cultural and operational strain? Will user growth maintain its pace amid broader fintech competition?

For now, the market has delivered a clear response. Investors pushed shares sharply higher after management outlined a leaner structure and stronger profit trajectory. The coming quarters will reveal whether this strategic reset translates into sustained performance, or introduces new risks along the way.