In short: Square catches up. Q2 revenue +9% Y/Y to $6.6B (a $140M beat) with adjusted EPS $1.02 ($0.15 beat), gross profit +25% to $3.2B, adjusted EBITDA $1.17B and adjusted operating margin at a record 27%. The fix investors were waiting for landed: Square gross profit grew 13%, in line with GPV, finally closing the gap between payment volume and monetization, with US GPV accelerating to 10% — its fastest since Q2 2023 — and international at +28%. Cash App gross profit +31%, primary banking actives +17%, consumer lending originations +59% to $18.9B. Neighborhoods, which connects Cash App consumers with Square sellers, crossed $1B in annualized seller GPV — "an early sign that Block's two ecosystems are starting to reinforce each other." The AI-driven operating model shows in throughput: code changes per engineer up 150% since the start of the year, with roughly three times as many features shipped in H1 as a year ago. FY26 gross profit guidance raised to $12.51B, adjusted operating income to $3.47B and adjusted EPS to $4.02. A disclosed author holding.
Block runs Square (card readers and software for shops and restaurants) and Cash App (a consumer payments and banking app). Revenue rose only 9%, but the number that matters — gross profit, which is what Block keeps after paying card networks — rose 25% to $3.2 billion, with a record 27% operating margin.
The specific fix investors had been waiting for arrived. For several quarters, the value of payments flowing through Square grew faster than the money Square earned from them — meaning Block was processing more but monetising it worse. This quarter Square's gross profit grew 13%, exactly in line with payment volume. The gap closed. US payment volume also grew 10%, its fastest since mid-2023.
Cash App keeps compounding: gross profit up 31%, people using it as their main bank account up 17%, and consumer lending up 59% to $18.9 billion of originations. A newer feature called Neighborhoods, which points Cash App users toward nearby Square merchants, passed $1 billion of annualised seller volume — the first real evidence the two halves of the company feed each other rather than just co-existing.
There is also an internal AI datapoint worth noting: code changes per engineer are up 150% since January, and Block shipped roughly three times as many features in the first half as a year ago. Guidance was raised across the board. The author owns it; analysis, not a recommendation.
In short: Brown's "best stocks" trade update, and he's flagging the exit. He talked about it at 76, "it ran up to 86, now it's pulling back after reporting what I thought was a pretty good earnings quarter. There were some questions in here about some of the expenses — remember, this is the company that reduced headcount by like 40%, and for some reason their expenses are rising. So this is what I mean by nobody really trusts Jack Dorsey for long." The level: "we said 81 was the breakout, that happened, the stock broke away, now it's retesting that level. I would be very careful remaining long this trade… a close to end the week below 80, I would be just taking this one off the table. Not every time we talk about a best stock is it a buy."
Block (Jack Dorsey's payments company, formerly Square) is on Josh Brown's "best stocks in the market" list, and he used this segment to flag the exit rather than the entry. The quarter itself was decent, but the expense line bothered him: this is a company that cut headcount by roughly 40% and is somehow still seeing costs rise. "This is what I mean by nobody really trusts Jack Dorsey for long."
His discipline is mechanical. $81 was the level the stock broke out from; it is now falling back to retest it. "I would be very careful remaining long this trade… a close to end the week below 80, I would be just taking this one off the table." The broader point he wanted on the record: a stock being on the best-stocks list is not permanently a buy.
In short: Jack Dorsey laid off 45% of the workforce and the stock went up 30% — the AI job-loss "copycat" wave.
Block (formerly Square) is Jack Dorsey's payments/fintech company. He cites it as the poster child for AI-driven layoffs: Dorsey cut 45% of the workforce — and the stock rose 30% on the news.
That reaction, he warns, encourages "copycat" companies to slash jobs too. The bigger worry is the wave of layoffs hitting consumer spending and feeding the slowdown — so it's a flag for the broader disruption, not a buy.
14:04hit to GDP, hit to the economic activity, you've got AI job losses coming in. Like in other words, Jack Dorsey at Square, he laid off 45% of his workforce. — AI. — And then his stock went up 30%. So, you've got all these copycat companies. So, you get AI job losses, and you've got this big tax hike that came out of higher energy prices, right? That's hitting the consumer.
In short: Jack Dorsey "wiped out 40% of his labor force" — a marquee example of AI "under the valley" job destruction.
Block (formerly Square) is the payments and financial-tech company run by Jack Dorsey. McDonald cites it not as a stock call but as a vivid example of his "AI disruption" warning: Dorsey reportedly cut about 40% of the workforce.
His point is that AI is wiping out jobs at software and tech firms first ("under the valley" — the painful disruption phase before AI's eventual productivity payoff). Mass layoffs like this feed weaker consumer spending and, in turn, more credit stress.
12:01done is it's created all this disruptive capital which is wiping out a lot of software companies. And if you look at like Jack Dorsey with with Block, he wiped out 40% of his labor force two Fridays ago. And so there's all of this disruptive energy that's coming from artificial intelligence and it's creating the credit crisis.
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