Jack Dorsey Just Fired 4,000 People and Blamed AI. His Stock Jumped 14%.

On Thursday, February 26, Jack Dorsey sent a letter to Block shareholders. In it, he announced the company was cutting nearly 4,000 employees—roughly 40% of its entire workforce. The reason he gave? “Intelligence tools have changed what it means to build and run a company.”

The market’s response was immediate and revealing: Block stock rose nearly 14% the next day. Because nothing says “innovation” like firing half your people and watching investors cheer.

The New Math: Fire People, Please Wall Street

Let’s be clear about what happened here. Block—formerly Square, the company that processes your coffee shop payments—decided that AI tools are now good enough to replace the humans who built, maintained, and improved those tools. And Wall Street responded exactly how you’d expect: by rewarding the company for cutting its labor costs.

“This is one of the first major examples of AI driving layoffs, but certainly not the last,” wrote AI executive Matt Shumer on X. He’s been warning about this moment for weeks, publishing a viral essay that compared this AI inflection point to February 2020—when COVID was about to upend everything.

Shumer’s message to anyone who thinks they’re safe? “If you’re saying ‘this won’t happen to me,’ reevaluate your thoughts. Now. It may be the most important thing you do.”

The AI Scare Trade Goes Live

This isn’t happening in a vacuum. Just days before Dorsey’s announcement, a research report from Citrini Research went viral with a doomsday scenario of a “human intelligence displacement spiral.” The report imagined a future where AI agents rapidly replace software engineers, financial advisors, and middle management, triggering mass defaults and economic collapse.

Most analysts dismissed the Citrini report as speculative fiction. Then Dorsey made it real. In announcing 4,000 actual layoffs with AI as the explicit justification, he gave Wall Street the brutal proof of concept it wanted to see.

The timing matters. Software stocks had already been hammered earlier in the week, with the Dow dropping over 800 points partly on AI automation fears. But once a major CEO actually pulled the trigger on mass AI-driven layoffs? The stock went up.

What About the 4,000 People?

Here’s what Jack Dorsey’s letter didn’t mention: the 4,000 people who now need to find work in an economy where CEOs are openly bragging about how many humans their AI tools can replace.

These aren’t factory workers or entry-level hires. Block employed engineers, product managers, analysts—the kind of skilled white-collar workers who were supposed to be safe from automation. The ones who spent years learning specialized skills, building expertise, contributing to products that millions of people use every day.

The message from Block to every tech worker is now crystal clear: your job is a line item that AI can reduce. And if your CEO isn’t already looking at you that way, Wall Street is asking why not.

The Brutal Metric

Some workplace observers say they see leaders conducting layoffs specifically to signal that AI investments are paying off. Fire people first, figure out if the AI can actually do their jobs later. It’s performance theater, but with real consequences for real families.

Even OpenAI CEO Sam Altman has warned there’s “AI washing” going on—layoffs being blamed on AI that are really just normal restructuring or pandemic-era overhiring corrections. But does that distinction matter to the 4,000 Block employees updating their resumes this weekend?

This Is What It Looks Like

For months, the threat of AI replacing workers hovered over the economy like a distant storm. This week, the storm made landfall. A billionaire founder cited AI to fire 4,000 people, and the market threw him a 14% party.

If you were wondering what the AI labor revolution would look like—who it would affect first, how companies would justify it, what the market would reward—now you know. The template has been written. The first major domino has fallen.

The only question left is: who’s next?

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Sources: Fortune, CBC News, The Indian Express