Back in February, Block Inc's stock surged over 20% after the company said it would cut about 40% of its workforce to pursue a "smaller, flatter" artificial intelligence strategy. Shares have continued running up since then, having appreciated and trading at their highest level in nearly a year.
That pivot has led one analyst to upgrade the stock, noting that the company's embrace of agentic AI has "reset its growth trajectory."
"Block’s reorganization and leveraging of agentic AI has reinvigorated a business model that had been widely regarded as stagnating," StoneX equity analyst Mark Palmer wrote Thursday in a note to clients. "Now, many investors are asking how many new products the company can put in front of the 59m Cash App active users and millions of Square sellers, and to what extent those additions will add to its revenues and earnings."
Palmer upgraded XYZ shares from "neutral" to "buy" with a $105 price target. The stock trades around $79.50 at the time of writing.
Block’s agentic AI tools are materially increasing engineering productivity, Palmer said. Goose is used weekly by about 60% of employees, while BuilderBot generates roughly 1,500 code changes a week.
Code changes per engineer are up 150% since the start of the year, the analyst continued, while AI handled nearly all production code changes in June. The company's Square unit shipped 130 new features in the first half of 2026, which Palmer said was about three times its pace from 2025.
Block’s product development expenses fell 16% year over year in the second quarter, while the company's gross profit beat estimates by 3.4% and adjusted operating income came in 20% above its forecast.
"The upgrade reflects our view that the market has yet to price in the improvement in the company’s operating results likely to result from its embrace of agentic AI, which has reset its growth trajectory, boosted its margins, and refilled its new product pipeline," Palmer wrote.