Feb. 27 at 8:53 PM
Software shares fell Friday after Block, Inc. announced plans to cut more than 4,000 employees — over 40% of its workforce — intensifying concerns that AI-driven efficiencies could reduce head counts and hurt demand for traditional software licenses.
Datadog and Workday each dropped more than 4%, while Salesforce fell nearly 3%. The iShares Expanded Tech-Software Sector ETF declined about 2%.
Investors worry that AI adoption could shrink corporate workforces, directly reducing per-seat software subscriptions — a core revenue model for many enterprise vendors. Analysts at Truist and J.P. Morgan suggested Block’s restructuring may signal how AI investment could reshape employment trends, with Bernstein warning it could become a “playbook” for others.
Earlier in the week, software stocks lost over
$200 billion in market value amid similar AI-related layoff fears. Still, some analysts remain optimistic.
$DDOG $WDAY $CRM $IGV