Key Takeaways
- Block closed at a new 52-week high on Nov. 9, up 15% in a week after a third-quarter beat and a 32% margin outlook for 2027.
- Square’s 14% volume growth was more than double PayPal’s 6%, and its restaurant sellers grew as fast as Toast.
- At 17x forward earnings, Block is cheaper than its recent history, but Cash App’s loan losses and a pending $764 million Justice Department deal are the risks.
Block (XYZ) closed at $88.56 on Nov. 9, a new 52-week high, up 14.9% from its Nov. 2 close after a third quarter that beat its own guidance.
In Block’s shareholder letter, CEO Jack Dorsey and CFO Amrita Ahuja say AI tools are turning Block into “a working intelligence, a mini AGI.” On Nov. 10, Block holds an event in San Francisco to formally introduce Builderlab, which sells those tools to other companies. The quarter also widened Square’s growth gap over PayPal (PYPL), while Square kept pace with Toast (TOST) among restaurants.
Block beat its own guide, then raised it
Gross profit rose 22% to $3.24 billion, more than $100 million above the $3.13 billion Block had guided to. Adjusted operating income jumped 92% to $923 million, a record 29% of gross profit. Block lifted its 2026 adjusted EPS guide to $4.15 from $4.02, and its first 2027 outlook calls for $4.58 billion of adjusted operating income, a 32% margin.
PayPal falls behind, and Toast holds even
Square grew payment volume 14% last quarter, more than double PayPal’s 6%. The market already prices PayPal as the slower grower, at around 10x forward earnings. Toast is the tougher rival. Its payment volume rose 20%, and Square’s food and beverage sellers grew at the same rate. The next reports from both companies will show whether Square can hold that pace as it goes after bigger chains.
Cash App’s loans are still the catch
Losses on loans, receivables and transactions rose 66% to $602 million. Growth slowed from 99% in the second quarter, but those losses now equal 19% of gross profit, up from 14% a year earlier. Block has also accrued $764 million for an agreement in principle with the Justice Department that still needs a final deal and court approval, and Block says the final cost could be higher.
TIKR tracks 47 analysts on Block. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Block, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Block’s Analyst Ratings
Dorsey now has to sell the “mini AGI”
The letter says that “we expect to generate our first machine intelligence revenue in the fourth quarter.” Until then, Block’s earnings come from Cash App and Square, and analysts expect them to keep climbing:
The 2027 estimate rose to $5.36 from $5.21 before the report, close to the 30% adjusted operating income growth Block expects.
Even so, the stock trades below its recent norm:
It traded at 17x forward earnings at the Nov. 6 close, below TIKR’s three-year average of about 20x. The $100 consensus target sits about 13% above the Nov. 9 close.
So can the “mini AGI” keep Block running? Record margins and rising estimates give the stock room to climb before any AI revenue shows up. The test is the fourth-quarter report, expected in late February: loss growth needs to keep slowing from 66%, and Builderlab’s first revenue needs to show up.
So what is Block stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
