Block Stock Skyrockets 20% After Deep Job Cuts and Ambitious 2026 Guidance

Block stock (NYSE:XYZ) lit up after-hours trading on Thursday, vaulting as much as 23 % to $66.88 on news that the fintech pioneer will slash roughly 4,000 jobs—about 40 % of its workforce—and lean aggressively on artificial-intelligence tools to drive efficiency. CEO Jack Dorsey told shareholders “a significantly smaller team, using the tools we’re building, can do more and do it better,” framing the layoffs as a pivot toward “intelligence-driven” operations rather than a retreat. Q4 earnings snapshot • Adjusted EPS: $0.65, in line with estimates. • Revenue: $6.25 billion, just shy of the $6.28 billion consensus. • Gross profit: Beat expectations, paced by 20 % growth at Cash App. Investors largely looked past the top-line miss, focusing instead on a dramatic cost reset and bullish forecasts. 2026 guidance electrifies the bull case Block now sees full-year 2026 gross profit climbing 16.9 %—with Square up 12 % and Cash App surging 20 %—while management reiterated its “Rule of 40” target for a combined gross-profit-growth-plus-adjusted-EBITDA margin north of 40 %. That outlook dwarfs prior street models and suggests the firm’s AI productivity play could rapidly expand margins. Why the AI layoffs matter Similar to the tech sector’s broader “do more with less” trend, Block argues that smaller, cross-functional teams armed with generative-AI coding assistants, risk engines and customer-service bots can iterate faster and cut fixed costs. The company expects to book one-time severance charges in Q1 but projects annual savings of $700–$800 million—a figure that drops straight to operating income in out-years. Wall Street reaction • Autonomous Research upgraded Block to “Outperform,” lifting its price target to $65 from $55. • Options volume spiked 3× average, with call contracts outpacing puts 5-to-1, signaling bullish sentiment. While shares remain down roughly 22 % year-to-date before Thursday’s surge, analysts argue the cost reset “de-risks” earnings power and puts a mid-$80s price target back in play over the next 12 months. Key risks to watch • Execution on AI integration—any hiccups could erase cost savings. • Regulatory scrutiny around large-scale layoffs and consumer-data use. • Competition from PayPal, Apple Pay and emerging BNPL providers. Bottom line for searchers wondering “Is Block stock a buy?”: the combination of a leaner cost base, accelerating Cash App monetization and upbeat 2026 guidance has reignited the growth narrative. Traders hunting momentum may ride the breakout, while long-term investors should monitor execution on the AI transition and margin trajectory in the coming quarters.