AI’s return on investment comes under scrutiny
Investors have waited years for artificial intelligence to move beyond a feature and become a key part of how companies work. Block’s latest earnings report provides an early look at whether that shift is happening.
Block’s AI-driven restructuring
Six months after reducing its workforce by 40%, Block posted a 25% year-over-year increase in gross profit. Adjusted operating margin reached a record 27%, and adjusted diluted earnings per share rose 65%. The company also raised its full-year outlook, expecting $12.51 billion in gross profit and 70% growth in adjusted earnings per share.
The gains did not come from AI alone. Square’s gross profit and payment volume each climbed 13%, while Cash App’s gross profit grew 31%. Consumer lending originations jumped 59%. Leadership has connected these improvements to a restructuring effort that relies on AI tools.
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In February, CEO Jack Dorsey stated that AI had changed the company’s economics. Smaller teams using advanced intelligence tools could now complete more work in less time. Early results support that view. Block released 130 features in the first half of 2026—over three times the 40 shipped in the same period a year earlier. AI now plays a role in nearly every production code change and review.
CFO Amrita Ahuja called the quarter a display of record profitability while still funding growth. AI helped speed up product development, but she did not attribute the gains solely to the technology. The company cannot yet separate AI’s impact from other factors like market conditions or operational changes.
Measuring AI’s impact remains difficult
Block’s situation shows a common problem for companies investing in AI: proving its direct value. Most firms include AI’s contributions in broader financial results, making it hard to isolate its effects. This is especially true when AI becomes part of the core operating model.
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The numbers suggest Block’s model is working, even if AI’s exact role is unclear. Gross profit growth and margin expansion point to progress, though investors will want clearer ways to track it.
The experiment remains in its early stages.
For now, the company’s results offer a rare example of what an AI-driven restructuring can achieve.
