Block (XYZ) stock has suddenly grabbed all attention on the Street. Shares of the fintech company behind Square and Cash App shocked the market after soaring roughly 20% following a massive wave of AI-driven layoffs announced by CEO Jack Dorsey. The move of cutting around 4,000 employees, nearly 40% of the company’s workforce, is one of the boldest corporate bets yet on how artificial intelligence (AI) is reshaping how companies operate. Now the question is whether this rally is the start of a new growth phase or just a short-term bounce.
Should you buy, hold, or dump XYZ stock now?
The market loves efficiency. Block’s stock is down 14% in the past six months and is flat so far this year. However, the recent 25% rally over the last five days suggests that investors are increasingly rewarding companies that promise automation, efficiency, and leaner operations.
During the Q4 earnings call, management emphasized that some engineering projects that previously took weeks to complete can now be done much faster with AI-assisted coding tools. Layoffs often signal cost discipline and margin expansion, and the company stressed that it is doing so not from a position of weakness. By cutting thousands of jobs, Block could dramatically reduce operating expenses while maintaining or even increasing output through AI tools.
In the fourth quarter, Block’s gross profit increased 24% year-over-year (YoY) to $2.87 billion, while adjusted diluted earnings per share rose 38% YoY. For the full year 2025, Block reported $10.36 billion in gross profit, marking 17% annual growth. The company also repurchased $790 million worth of shares in the fourth quarter alone, bringing total buybacks for 2025 to $2.3 billion.
Management now expects gross profit to increase 18% YoY to $12.2 billion along with 54% growth in adjusted operating income. Additionally, adjusted diluted earnings per share are expected to rise by 54% to $3.66 in 2026. These projections imply that a combination of strong revenue growth and a lower cost base could significantly expand margins in the coming years.
Block’s largest ecosystems, Cash App and Square, continue to be key pillars of its ongoing success. Notably, Cash App monthly active users climbed to 59 million by the end of 2025, while primary banking active users grew 22% YoY to 9.3 million. Meanwhile, Square’s gross payment volume growth accelerated to 10% in 2025, and the company reported its strongest year ever for new seller volume added. Block has spent the past several years investing in internal automation systems and AI infrastructure. Some of these tools have already been fully implemented, while others are still being developed. Management believes the benefits will be more substantial when the technology improves. Block’s vision is to eventually become a “smaller, faster, intelligence-native company.”
