The brutal metric companies are using to show their AI bets are justified
Business Insider
February 28, 2026
AI-Generated Deep Dive Summary
**The article highlights how companies are increasingly using layoffs as a metric to demonstrate the success of their AI investments, with Block CEO Jack Dorsey cutting nearly half his workforce as a high-profile example. While this strategy may boost stock prices and signal efficiency gains, experts warn that such drastic cuts can lead to the loss of critical skills and overstate AI's impact.**
In a recent move that has drawn significant attention, Block CEO Jack Dorsey announced plans to lay off approximately 40% of the company’s workforce, reducing its employee count from over 10,000 to fewer than 6,000. Dorsey attributed this decision to the company’s success in integrating AI to drive efficiency, despite the business remaining profitable and healthy. Investors responded positively, with Block’s shares rising over 16% following the announcement. This trend is not unique to Block; other major companies like Salesforce, HP, and IBM have also linked job cuts to AI-driven gains, suggesting a broader shift in how businesses measure the returns on their AI investments.
The rationale behind these layoffs often revolves around signaling to investors that AI initiatives are paying off. Michael Blank, a finance professor at Stanford, explains that layoffs can serve as a “noisy round of layoffs” to demonstrate that AI has moved beyond experimentation and is now delivering tangible productivity improvements. However, this approach may oversimplify the complexity of AI’s role in business transformation. Gary Cohn, a former economic advisor, cautionary noted that while companies can point to reduced headcount as a key performance indicator (KPI), this doesn’t necessarily reflect the true value of AI integration.
Experts also warn about the risks of cutting too deeply. Wayne Cascio, a professor of management, emphasized that excessive layoffs can lead to the loss of critical skills and institutional knowledge, forcing companies to rehire laid-off employees later
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Originally published on Business Insider on 2/28/2026