Sometimes you make a big bet, and then the company you bet on decides to rewrite the entire playbook. That's what happened with Block Inc. (XYZ) this week. The stock surged roughly 20% premarket after CEO Jack Dorsey announced the company will cut nearly 4,000 employees — about 40% of its workforce — to become "more compact, flat, and AI-focused."

The stock, currently up over 17% and trading at around $63.90 per share, entered the week down double digits year to date. Then Dorsey rewrote the operating model.

Billionaires Were Already Buying

Here's the interesting part: some very smart money was already piling into Block before this announcement. In the fourth quarter, ARK Investment Management, led by Cathie Wood, increased its Block stake by more than 26%, owning roughly 3.4 million shares.

Tiger Global Management, run by Chase Coleman, boosted its position nearly 44% during the same period, holding about 6.4 million shares.

That positioning matters. Both managers have historically leaned into platform businesses with operating leverage inflection potential. Block's pivot may be exactly that.

‘A Decision At This Scale Carries Risk’

Dorsey didn't hide from the magnitude of the move. "Today we're making one of the hardest decisions in the history of our company," he wrote on X, adding that the company is reducing from over 10,000 employees to just under 6,000. "A decision at this scale carries risk but so does standing still," he noted.

He was careful to emphasize that the move isn't about financial stress. "Our business is strong. Gross profit continues to grow."

Instead, he said AI tools are "fundamentally changing what it means to build and run a company." He also rejected the idea of gradual cuts. "Repeated rounds of cuts are destructive… I'd rather take a hard, clear action now."

That language signals something bigger than just trimming expenses. If AI enables smaller teams to generate the same — or greater — output, then margins structurally shift higher. That changes the entire valuation framework for a company.

Wood and Coleman were already betting on the platform. Now Dorsey is accelerating the earnings math. And if this becomes a template across tech and fintech, Block may not just be cutting costs. It may be front-running a new corporate model.