Bernstein labels Block’s planned 40% workforce reduction a potential “seismic moment,” questioning whether it signals a major leap in AI-driven productivity or a final cull of organizational bloat. The brokerage, rating the stock Outperform with an $85 target, notes the scale is rare for a leading firm, occurring even after a solid quarter fueled by Cash App Borrow.

This move follows a 21% headcount drop since 2023, yet staffing had still ballooned over 150% from 2019 levels despite gross profit surging more than 400%. Efficiency metrics are improving; Block generated about $800,000 in gross profit per employee in 2025, with 2026 guidance pointing to $1.5 million, a figure that would surpass many large tech companies.

Bernstein estimates the cuts could save roughly $750 million in personnel costs for 2026, or $1 billion annualized. However, management is only partially embedding these savings into adjusted operating income guidance, signaling planned reinvestment. While raising 2026 and 2027 forecasts, Bernstein maintains its price target, citing limited visibility into AI’s broader consumer impact.