$Block(XYZ.US)
Block cut 40% of their workforce today.The stock, which has struggled for years, is up 20% after hours.While one can argue that the company never needed 10,000 employees, there is probably something around increased productivity/efficiency due to AI that went into the thinking around the layoffs.No one wants to see people lose jobs, but there are plenty of bloated companies that may realize shareholder return can happen with downsizing.Where does that excess capital now go? Probably to companies like $NVIDIA(NVDA.US) that will be supplying the compute which allows Block to cut 40% of their workforce.No idea if this is the beginning of something really bad for the labor market (I am more optimistic on broader job growth with AI) but it absolutely means owning a stake in the companies doing the replacement is important. Once again, the market is pricing that future growth for $NVIDIA(NVDA.US) at 18x after today’s fall. Feels cheap if the allocation of capital will shift to compute. MI guess the other question is…what’s the next company to layoff this large a % of their workforce and lean more heavily into AI?Source: amit
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