Block Earnings Jump as Square Eyes AI-Driven Growth

TLDR

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Block reported fourth-quarter operating income of $485 million and raised its 2026 gross profit forecast to $12.2 billion.
Block reduced its workforce to under 6,000 employees as it shifts to a smaller and flatter structure.
Jack Dorsey said the company aims to reach more than 2 million dollars in gross profit per employee.
Block purchased 103 additional bitcoin and now holds 8,883 BTC valued at about $577 million.
Analysts said Square stands to benefit most from Block’s move toward AI-driven tools and automation.

Block reported strong fourth-quarter earnings and raised its 2026 gross profit forecast. The company also announced deep workforce cuts as it restructures operations. Analysts said Square stands to gain most from the company’s shift toward artificial intelligence tools.

Block posted an operating income of $485 million for the fourth quarter, while adjusted operating income reached $588 million. Net income attributable to common stockholders totaled $116 million, and adjusted EBITDA rose to $930 million. The company lifted its 2026 gross profit guidance to $12.2 billion, which reflects 18% annual growth.

Shares of Block surged more than 22% in after-hours trading following the results. The stock traded near $62.34 at publication, reflecting a 14% gain. However, the shares remain over 70% below their pandemic-era peak.

Block Restructures Workforce and Expands Bitcoin Holdings

Block reduced its workforce from more than 10,000 employees to just under 6,000. Chief Executive Officer Jack Dorsey said the company aims to become “smaller” and “flatter” while operating as AI-first. He stated on X, “Yes, we over-hired during COVID because I incorrectly built two separate company structures.”

Dorsey added that the company corrected its structure in mid-2024. He also said Block now targets more than $2 million in gross profit per employee. He wrote that this goal represents four times its pre-pandemic efficiency, which stayed near $500,000 until 2024.

Block also purchased 103 additional Bitcoins during the quarter. The company now holds 8,883 BTC valued at about $577 million at current prices. This position ranks Block fourteenth among corporate bitcoin treasuries.

Square Expected to Lead Growth Under AI Strategy

Analysts at William Blair maintained an “outperform” rating and set a $67 price target on Block shares. Andrew Jeffrey and Adib Choudhury wrote that the workforce reduction reflects a reassessment of how Block will compete and drive returns. They stated that Square could benefit most from the company’s AI-centered model.

They wrote, “We anticipate that Square will increasingly automate customer functionality.” They added that merchants may build bespoke AI solutions through Square’s tools. The analysts said they believe Square leads competitors in this capability.

Square’s year-to-date gross payment volume growth reached 7.5%, which exceeded the fourth quarter pace by 50 basis points. Management reported that payment volume rose 12% year to date, marking a two-point acceleration. New restaurant-focused products helped drive a 29% increase in new volume, delivering the strongest quarter in nearly five years.

Cash App generated $865 million in financial services gross profit during the quarter. This result exceeded William Blair’s $770 million estimate. Analysts said short-term consumer liquidity products continue to support Cash App’s growth.

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