Stocks Slide Early as AI Reshapes Corporate Strategy

U.S. stocks fell sharply Friday morning as investors digested a sweeping artificial-intelligence deal between OpenAI and Amazon alongside a dramatic AI jobs cut, workforce overhaul at fintech firm Block.

The Dow Jones Industrial Average dropped 742.27 points, or 1.50%, to 48,756.9 shortly after the open. The S&P 500 declined 52.87 points, or 0.77%, to 6,855.99, while the Nasdaq Composite fell 204.34 points, or 0.89%, to 22,674.0.

The pullback comes amid intensifying focus on how AI investment and automation are reshaping corporate cost structures and capital spending.

Amazon Web Services and OpenAI announced a multi-year strategic partnership under which AWS will serve as the exclusive third-party cloud distribution provider for OpenAI Frontier, an enterprise platform designed to deploy and manage AI agents. According to the companies, OpenAI will consume approximately 2 gigawatts of Trainium capacity through AWS infrastructure, part of an expansion of an existing $38 billion agreement by an additional $100 billion over eight years. Amazon also said it will invest $50 billion in OpenAI, beginning with $15 billion upfront and an additional $35 billion contingent on certain conditions.

“OpenAI and Amazon share a belief that AI should show up in ways that are practical and genuinely useful for people. Combining OpenAI’s intelligence with Amazon’s infrastructure and global reach helps us put powerful AI into the hands of businesses and users at real scale,” said Sam Altman, co-founder and CEO of OpenAI.

At the same time, Block delivered a quarterly report that underscored AI’s growing influence on corporate workforce strategy.

The company reported fourth-quarter adjusted earnings per share of $0.65 on revenue of $6.25 billion. Gross profit rose 24% year over year to $2.87 billion, while adjusted operating income climbed 46% to $588 million and adjusted EBITDA reached $930 million.

More striking to investors was Block’s decision to reduce its workforce by more than 40%, shrinking from over 10,000 employees to just under 6,000. The company expects to incur $450 million to $500 million in restructuring charges, primarily in the first quarter. Management framed the move around efficiency gains enabled by AI tools, targeting over $2 million in gross profit per employee.

For 2026, Block projects $12.2 billion in gross profit, up 18% year over year, alongside $3.2 billion in adjusted operating income and $3.66 in adjusted diluted EPS, both up 54%.

Together, the announcements underscore a pivotal shift: while companies continue to pour capital into AI infrastructure, they are simultaneously using automation to compress headcounts and expand margins. Investors appear to be recalibrating valuations as the balance between growth, capital intensity and labor efficiency enters a new phase.