Bank of America Cuts Block Target to $75; AI-Driven Layoffs Spark Backlash
Block cut nearly half its staff, with Jack Dorsey citing AI efficiencies, sparking skepticism over AI-washing and automation gains. Bank of America cut Block’s price target to $75 from $86 while Block forecasted 2026 adjusted operating income of $3.2 billion (26% margin) and Q1 gross profit of $2.8 billion (22% growth).
1. AI-Driven Workforce Reduction
Block announced a reduction of nearly 50% of its workforce, with co-founder Jack Dorsey attributing the cuts to gains in artificial intelligence efficiency. The move has drawn criticism from industry observers who question whether the company is leveraging AI advancements or simply rebranding traditional cost-cutting measures as technological innovation.
2. Analyst Price Target Cut and Financial Forecast
Bank of America trimmed its price target on Block to $75 from $86, citing weaker sentiment in the payments sector and soft valuations among peers. Despite the reduction, Block issued a 2026 forecast for $3.2 billion in adjusted operating income at a 26% margin and projected first-quarter gross profit of $2.8 billion, marking 22% year-over-year growth.