Afterpay owner Block will cut more than 4000 jobs – almost 40% of its global workforce – as founder and chief executive Jack Dorsey declares AI has “fundamentally changed what it means to build and run a company”.

The US fintech (formerly known as Square), which owns Square and Cash App, will shrink from about 10,000 staff to just under 6,000 as it restructures around AI-powered tools and smaller teams.

The move sent Block shares soaring more than 20% in after-hours trade.

In a letter to shareholders and staff, Dorsey said the decision was not driven by financial stress, pointing to a 24% lift in quarterly gross profit to $US2.87 billion ($4.04 billion) and a 38% rise in adjusted earnings per share.

“But something has changed,” he said. “Intelligence tools have changed what it means to build and run a company. A significantly smaller team, using the tools we’re building, can do more and do it better.”

The move has big implications in Australia, where Afterpay was founded and where companies including WiseTech Global, Telstra and Commonwealth Bank have announced job cuts alongside increased investment in AI.

Dorsey said AI capabilities had accelerated sharply in recent months, describing December as a tipping point when models became “an order of magnitude more capable”. Rather than implement rolling redundancies, he opted for a single deep cut.

“I don’t think we’re early to this realisation. I think most companies are late,” Dorsey said. He predicted many businesses would make similar structural changes within a year.

Affected employees will receive at least 20 weeks’ pay, additional tenure-based severance, six months’ healthcare and $US5,000 in transition support.

Block’s overhaul comes amid a broader AI-driven shake-up across the tech sector, with global giants including Amazon, Meta and Microsoft trimming headcount.

This week saw eBay cut around 800 roles – roughly 6% of its global full-time workforce – after the e-commerce giant secured its acquisition of fashion resale marketplace Depop.