Okay so I've been watching this tech layoff situation pretty closely, and Block's move last year was honestly a turning point. Jack Dorsey basically said they're cutting 40% of their workforce to lean into AI tools, and here's the thing - the market absolutely loved it. Stock jumped 16.8% that day while the broader software sector got hit.

What's interesting is how this shifted the entire narrative. Suddenly investors started looking at other bloated tech companies and thinking, 'who's next?' Because let's be real, a lot of these firms went on massive hiring sprees during the pandemic and never really trimmed back.

I started digging into which companies might follow, and a few stood out. IBM's been touting this shift to a leaner, more asset-light model for a while now. Their revenue per employee sits at around $240k, which is pretty low compared to peers. They had Watson for AI but haven't really capitalized on it the way they could. With the stock down hard, layoffs could actually reset investor sentiment there.

Then there's DocuSign. Similar story - massive hiring during the boom, stock still down over 80% from pandemic peaks. They're generating about $450k per employee, and like Block, they seem positioned to benefit from actually using AI tools instead of just talking about them. Market would probably reward that move.

Zillow's another one showing bloat signals. Real estate boom hiring, stock down 35% year-to-date, bringing in $350k per employee. Plenty of margin expansion potential through restructuring.

The bigger picture here is what comes after this wave. Software companies spend nearly everything on headcount, so there's massive leverage in layoffs. What started with Block might just be the beginning of a trillion-dollar sector recalibration. After this shakes out, we could see some real efficiency gains and margin expansion across the space.

Investors are clearly signaling they want to see companies get serious about doing more with less. Whether that's sustainable long-term is another question, but for now, the market's rewarding the move.