Yet another company has laid off thousands of employees — and it’s explicitly mentioned AI as the leading cause.
Twitter founder Jack Dorsey’s payments and financial services company Block announced this week it would be cutting its workforce by nearly half, reducing headcount from over 10,000 employees to just under 6,000. In a memo posted publicly by Dorsey himself, the Block co-founder and CEO was unusually candid about the rationale: it wasn’t financial trouble driving the cuts, but a seismic shift in how work gets done in the age of artificial intelligence.
“We’re not making this decision because we’re in trouble,” Dorsey wrote in a memo to employees. “Our business is strong. Gross profit continues to grow, we continue to serve more and more customers, and profitability is improving. But something has changed.” That something, he made clear, is AI. “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. And that’s accelerating rapidly.”
Dorsey said he faced a choice: make gradual cuts over months or years as the shift played out, or act decisively now. He chose the latter, arguing that drawn-out, repeated rounds of layoffs are “destructive to morale, to focus, and to the trust that customers and shareholders place in our ability to lead.” The company has committed to a substantial severance package for those let go, including 20 weeks of pay plus one week per year of tenure, six months of healthcare, equity vested through the end of May, and a $5,000 transition fund.
For those staying, Dorsey’s message was pointed: Block would be rebuilt with “intelligence at the core of everything we do — how we work, how we create, how we serve our customers.”
Block Is Far From Alone
Block’s announcement is striking in its directness, but the underlying story is one that’s been playing out across the corporate world for the past two years. AI was responsible for nearly 55,000 U.S. job cuts through the first 11 months of 2025 alone, according to consulting firm Challenger, Gray & Christmas, with overall job cuts topping 1 million for the year — the highest level since the COVID-19 pandemic in 2020.
Salesforce CEO Marc Benioff was among the more candid executives on the subject. “I was able to rebalance my head count on my support,” he said in a 2024 podcast interview. “I’ve reduced it from 9,000 heads to about 5,000 because I need less heads.” He attributed the reduction to AI agents now handling customer support tasks and sales leads that previously required large human teams — framing it not as job destruction but as a “rebalancing.”
Microsoft has been another prominent example. The company cut roughly 15,000 jobs through 2025, with CEO Satya Nadella writing in a memo that Microsoft needed to “reimagine” its mission for a new era, describing a shift “from a software factory to an intelligence engine empowering every person and organization to build whatever they need to achieve.”
Klarna, the buy-now-pay-later fintech, went further than most in making its AI displacement explicit. The company employed around 7,000 people in 2022 and had shrunk to roughly 3,000 by 2025. CEO Sebastian Siemiatkowski said he expects that number to fall below 2,000 by 2030. In 2024, the company deployed an AI assistant that it says now handles the equivalent workload of 700 full-time employees, covering everything from customer queries to refund processing.
IBM said AI agents had already replaced hundreds of back-office roles and confirmed additional cuts as it shifted talent toward AI and quantum computing. Paycom laid off more than 500 employees after automating payroll and back-office functions, with staff told their roles had been replaced by AI-driven systems. Workday, the HR and enterprise software firm, cut roughly 1,750 jobs in February 2025, with CEO Carl Eschenbach saying the layoffs were needed to prioritize AI investment and free up resources.
A Convenient Narrative — or a Real Shift?
Not everyone is taking the AI-layoff narrative at face value. A January 2026 research briefing from Oxford Economics argued that “firms don’t appear to be replacing workers with AI on a significant scale,” suggesting instead that some companies may be using AI as cover for routine headcount reductions — effectively “dressing up layoffs as a good news story.” One labor economist quoted in Fortune put it bluntly: companies say AI will cover the lost work, but “hadn’t done it. They’re just hoping. And they’re saying it because that’s what they think investors want to hear.”
Forrester Research went so far as to predict that half of AI-attributed layoffs would be quietly reversed — with companies rehiring workers offshore or at significantly lower salaries once promised AI capabilities failed to materialize. Forrester found that 55% of employers already report regretting laying off workers for AI, often because the technology wasn’t yet capable of replacing the roles eliminated.
Block’s case, however, reads differently. Dorsey’s memo doesn’t project future AI potential — it describes a transformation already underway inside the company. The AI tools Block is “creating and using,” he wrote, are already changing how teams operate, and the shift is “accelerating rapidly.” Whether that claim holds up over time will be watched closely by investors, employees, and an industry still trying to separate AI reality from AI rhetoric.
What’s clear is that the workforce calculus has changed. As one analyst put it, unlike earlier layoff waves driven by over-hiring, many of 2025’s reductions were permanent, with entire roles eliminated as companies rebuilt around “AI-first operating models.” Block, at least, is betting heavily that’s the right direction — and willing to stake half its workforce on that bet.