The tech industry has spent the last couple years debating whether artificial intelligence will actually eliminate jobs at scale or simply be used as an excuse for companies to engage in mass layoffs.

Block just firmly planted its flag.

Jack Dorsey, co-founder and CEO of the Square parent, announced Thursday that his company is cutting about 40% of its workforce, reducing head count from over 10,000 to just under 6,000. And he was explicit about the reason, telling investors on Block’s earnings call that “intelligence tools” have fundamentally changed what it means to build and run a company.

Dorsey suggested the rest of corporate America is about to follow suit, predicting that the majority of businesses will reach the same conclusion within a year.

“Our business is strong,” Dorsey wrote in a post on X. “Gross profit continues to grow, we continue to serve more and more customers, and profitability is improving. But something has changed.”

Investors instantly embraced the message, sending the stock up about 25% in extended trading on Thursday, though the gains were muted a bit on Friday, with shares closing up 17%.

Block also provided an earnings forecast for the year that sailed past estimates, even as results for the past quarter were largely inline with expectations.

Morgan Stanley analysts upgraded Block to overweight, writing that AI-driven efficiencies should deliver increased profitability. Analysts at Goldman Sachs raised their price target, noting that the cuts would vault Block from middle of the pack to near the top in fintech workforce productivity. Wells Fargo kept its buy rating, calling the quarter “chock full of positive surprise.”

Block expects to take a $450 million to $500 million hit for restructuring costs, largely front-loaded in the first quarter, with the bulk of the cuts done by the middle of the year. Dorsey said he chose to act all at once rather than phase the cuts.

“Repeated rounds of cuts are destructive to morale, to focus, and to the trust that customers and shareholders place in our ability to lead,” he wrote.

The move dwarfs recent AI-linked cuts at Pinterest, CrowdStrike and Chegg, and lands as the debate over AI and jobs is consuming Wall Street.

Earlier this week, Citrini Research published a thought experiment that went viral titled, “The 2028 Global Intelligence Crisis” — a hypothetical memo set two years in the future warning that AI-driven layoffs could trigger a negative feedback loop of white-collar displacement, collapsing consumer spending and systemic financial damage.

While the report found its share of critics, notably from Citadel Securities, the argument that AI-based head count reductions would first show up at strong, profitable software companies has a real-world case study.

Block says it’s now aiming for north of $2 million…