Block Inc's internally developed artificial intelligence infrastructure could become a new source of revenue for the fintech company, according to analysts at William Blair.
The analysts led by Andrew Jeffrey said Block has built a "formidable" AI technology stack that is already being used to improve internal efficiency, accelerate product development and add capabilities across its Square and Cash App ecosystems. While AI's long-term productivity benefits are expected to be broadly distributed across companies, the analysts said Block appears to have an opportunity to monetize its technology advantage in the near term by licensing its infrastructure to third parties.
Jack Dorsey-led Block (NYSE: XYZ) is in licensing discussions with potential deals that could add to gross profit as soon as 2027. The analysts said the opportunity is not widely reflected in current investor expectations and could provide a catalyst for Block's stock.
"We are increasingly bullish following a recent NDR with Matt Ross, head of Block's IR team. We encourage investors to add to positions. Our view is that Block is more competitively differentiated, with greater long-term economic share gain potential than its valuation parity with legacy fintech indicates," the analysts wrote Monday in a note to clients.
Earlier this month, Block raised its 2026 gross profit forecast to $12.51 billion.
AI gains reflected in Block's 'Rule of' metrics
The report pointed to Block’s recent reduction in force and resulting improvement in its financial "Rule of" metrics as evidence of the potential efficiency gains from its AI technology. William Blair cautioned that not all of Block’s technology initiatives have gained traction. Proto, the company’s bitcoin mining compute platform, has so far failed to generate significant adoption, according to analysts.
In its second-quarter earnings, the fintech company reported a 31% year-over-year decline in bitcoin ecosystem gross profit.
The firm is increasingly bullish on Block overall, arguing that the company's technology and go-to-market advantages are not adequately reflected in its valuation relative to legacy fintech peers. Square’s second-quarter gross payment volume grew 13%, including 10% growth in the U.S., which the analyst said was roughly twice the market's growth rate.
The report also highlights Cash App’s lending business as a key driver of future growth.
XYZ shares are up about 15% in the year-to-date period, trading around $80 with a $44 billion market cap according to The Block's price data. William Blair has an "outperform" rating on the stock.