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Hyunsoo Rim2/27/26

Block soars after announcing 40% workforce cut amid AI push

Block, the payments and fintech firm led by Twitter cofounder Jack Dorsey, is up almost 20% in premarket trading after announcing plans yesterday to cut 40% of its 10,000-person workforce.

Alongside the layoff announcement, Block reported $6.25 billion in Q4 revenue, slightly ahead of expectations, while gross profit for the quarter grew 24% year on year. The company also raised its full-year guidance for both gross profit and operating income.

In a post on X, Dorsey said the decision wasn’t made because the company is in “trouble,” instead framing the move as a structural shift. Indeed, Block has invested heavily in internal AI tools, including launching its own system called Goose in early 2025. In a letter to shareholders, Dorsey said “a significantly smaller team” using these tools “can do more and do it better.”

Most of the layoffs will occur in Q1 and will be “substantially” completed by the end of Q2, with expected restructuring charges of approximately $450 million to $500 million, according to an SEC filing.

Block is the latest company to tie job cuts to AI in Corporate America. Outplacement firm Challenger estimates roughly 55,000 US layoffs were attributed to the technology in 2025, almost 13x the level two years ago. Dorsey predicted that most companies “will reach the same conclusion and make similar structural changes” within the next year.

The company had more than tripled its headcount from the end of 2019 through 2022, with its number of employees rising from 3,845 to 12,428. When presented with this tidbit, Dorsey acknowledged on X that “yes we over-hired during covid because i incorrectly built 2 separate company structures.” Last year, Block spent roughly $68 million on an event for employees, which reportedly featured performances from T-Pain and Soulja Boy.

Despite the rally, Block remains more than 75% below its 2021 peak.

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Max Knoblauch18m

CarMax sinks following Q4 earnings report

Used car retailer CarMax reported its fourth-quarter earnings before the bell on Tuesday. It’s shares fell about 7% in premarket trading.

The company reported:

Adjusted earnings of $0.34 per share, compared to Wall Street estimates of $0.23 per share compiled by FactSet.
Sales of $5.9 billion, above expectations of $5.7 billion.
Retail gross profit per unit of $2,115, slightly below estimates and down $207 from the year prior.
181,188 used vehicles sold to retail customers, down about 1% from the year prior.

For fiscal 2027, CarMax said it expects to open four new stores. The company expects retail GPU (gross profit per unit) to “decline at a rate broadly in line with our Q4 FY 2026 year-over-year trend.”

CarMax has seen elevated interest in EVs and hybrids in recent weeks, as gas prices continue to climb amid the war in Iran. Last month, the company told Sherwood News that page views for EV and hybrids had risen more than 9% compared to the month prior.

Activist investor Starboard recently took a $350 million stake in CarMax, urging the company to cut costs and adopt more dynamic pricing. Last week, it was announced that CarMax would add two board members after talks with Starboard.

JPMorgan drops after cutting full-year net interest income outlook

The bank had just upped its guidance for net interest income in late February.

Jamie Dimon Visits "Mornings With Maria"

HSBC Group's CEO, Georges Elhedery, just broke down why end-buyers of oil are facing prices way above what traders see on their screens.

During a fireside chat with Bloomberg TV’s David Ingles at HSBC’s Global Investment Summit, Elhedery explained why his “biggest worry about the global economy is the disruption that’s coming from the Strait of Hormuz closure, or quasi closure.”

While the ceasefire between the US and Iran was intended to improve the flow of oil through this key chokepoint, the subsequent announcement of a US blockade of the waterway threatens to do precisely the opposite.

And that’s potentially prolonging, or exacerbating, the pain for crude importers, as Elhedery unpacked:

“What worries me is not the headlines, I mean oil headline is above $100, $110. Realistically, if you are now trying to get oil from the Middle East, you may be paying $140, $150.
Realistically, if you try to get oil from the Red Sea, you are paying more than $30, $40 for shipping. Insurance costs, which used to be 25 basis points, is more like 5%, and war insurance has been scrapped, you’re paying 5% without even the war insurance component.
So the barrel of oil door to door or the barrel of refined oil door to door is way above the headline price of oil. The highest I’ve seen, and I’m hoping we don’t see more of that, but the highest I’ve seen is $286 dollars for a barrel of oil that reached Sri Lanka. This is not a country and an economy that can easily afford these kind of prices sustainably.”

In separate interview with Bloomberg News, Elhedery warned that the continuation of these shipping disruptions would be felt not just in the price of energy, but also its availability.

Separately, the International Energy Agency updated its oil market outlook, with the Paris-based organization now forecasting a contraction in both supply and demand for oil, predicting an "80,000 bpd drop in demand growth this year, from a 640,000 bpd rise in its March report" according to Reuters.

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American Airlines jumps on potential merger talks with United

American Airlines was trading up more than 5% in premarket on Tuesday after Bloomberg and Reuters reported that United Airlines CEO Scott Kirby had floated the idea of a possible merger with American Airlines.

According to Reuters, Kirby raised the idea during a February White House meeting with President Trump, though it remains unclear whether United has made any formal approach to American or whether any deal process is underway.

United CEO Has Pitched Possible Combination With Rival American

United CEO Has Pitched Possible Combination With Rival American

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Credo Technology soars after announcing deal to acquire photonics company

Credo Technology Group is soaring in premarket trading after announcing an agreement to acquire DustPhotonics, a developer of silicon photonic integrated circuits for optical transceivers (that is, chips that help use light to move information around data centers).

The price is $750 million in cash plus 920,000 shares of Credo, and has the potential to escalate from there based on the achievement of certain financial milestones.

The acquisition marks a concerted effort by Credo to play both ends of connectivity: advanced photonics in addition to active electrical cables (its bread and butter).

Per the press release, “The acquisition will position Credo with a vertically integrated connectivity stack... for scale out and scale up networks — addressing both electrical and optical interconnects across the full AI infrastructure.”

Following this transaction, the company expects optical revenues of more than $500 million in fiscal 2027, well above the pre-acquisition consensus estimate of $161 million.

Management projects this deal will be accretive to adjusted earnings per share in fiscal 2027.

Shares of Credo boomed after Broadcom reported earnings last month, as the custom chip specialist said that its clients were sticking with direct attach copper cables through 2028. But going forward, connectivity demand appears to be a story of both copper-centric and light-centric solutions to transmit information within and between racks.

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