In late February, FinTech company Block – which owns Square, Cash App, and Tidal – announced that it plans to cut 40% of its workforce due to AI efficiencies. This will reduce its headcount from around 10,000 people to just under 6,000.
Naturally, this move is likely to boost the company’s profitability levels significantly. So, it’s not surprising to see that Wall Street analysts are raising their price targets for XYZ stock.
A More Streamlined FinTech Company
Block announced the layoffs in its Q4 letter to shareholders1. In the letter, CEO Jack Dorsey explained that AI tools have fundamentally changed what it means to build and run a company.
Using AI, a significantly smaller team can do more and do it better, according to Dorsey. He added that within the next year, he expects the majority of companies to reach the same conclusion and make similar structural changes.
Dorsey said that he chose to make a large number of cuts all at once rather than phase cuts over time. The company expects to take a $450 million to $500 million hit for restructuring costs, largely front-loaded in the first quarter of 2026.
He went on to say that looking ahead, intelligence will be at the core of how the entire company works – going forward it will use AI to make decisions, manage risk, build products, and serve customers. He also said that the company is moving towards a model where customers can build their own features directly on top of its capabilities and that this should dramatically increase the value that the company can deliver per customer.
Strong Q4 Earnings
Looking beyond the AI layoffs, Block’s Q4 earnings were strong. For the quarter, gross profit was up 24% year over year to $2.87 billion. Breaking this down, Cash App saw 33% year over year growth. Meanwhile, Square generated 7% growth.
Operating income for the quarter came in at $485 million versus $13 million in Q4 2024. Adjusted diluted earnings per share was $0.65 versus $0.47 a year earlier.
For the full year, gross profit was $10.4 billion, up 17% year over year. Adjusted diluted EPS was $2.37 compared to $3.37 in 2024.
In terms of guidance, the company said that it is targeting gross profit of $12.20 billion for 2026 along with adjusted diluted EPS of $3.66 (versus $3.192 expected). These forecasts represent growth of 18% and 54% respectively.
Wall Street’s Forecasts for Block Stock
Since the company’s Q4 earnings and the layoffs news, a number of Wall Street firms have raised their price targets3 for XYZ stock including:
HSBC: $70 to $77
Cantor Fitzgerald: $70 to $78
TD Cowen: $91 to $95
BofA Securities: $75 to $86
At present, the average price target is $85. That is roughly 30% above the current share price.
It’s worth noting that the company’s valuation remains low. Taking Block’s 2026 earnings forecast of $3.66, the forward-looking price-to-earnings (P/E) ratio is only 18.
Given this valuation, and analysts’ bullish price targets, XYZ could be a stock to watch in 2026.
Footnotes:
1Block Q4 2025 Shareholder Letter, as of February 27, 2026
2finimize, Block Beat Earnings, Then Planned A 40% Workforce Cut, as of February 27, 2026
3Investing.com, Block Inc (XYZ), as of February 27, 2026
