Square growth accelerates as AI speeds up product shipping
- Cash App remains a strong growth engine, with gross profit up 31% year over year in Q2 2026.
- Square gross profit and payment volume both grew 13% in Q2 2026, marking an acceleration for the segment.
- AI tools helped Square ship 130 features in the first half of 2026, a threefold increase from the prior year.
- Cash App Borrow loan origination volume jumped 59% in Q2 2026, though management expects growth to normalize.
- Rising hardware costs for memory could pressure device margins later in the year.
Faster shipping meets credit questions
Block is finding a balance between strong profitability and accelerating growth. In Q2 2026, Square gross profit grew 13% year over year, and U.S. payment volume hit its fastest growth rate since mid-2023. Cash App gross profit grew 31%. The company also proved that its recent workforce cuts have not slowed it down. By leaning on internal AI tools, Block shipped 130 features in the first half of the year, up more than three times from a year earlier.
The bull case focuses on this new speed and improving unit economics. Square Financial Services is moving into deposit-taking, which should lower funding costs for consumer lending products like Cash App Borrow. New AI products like Managerbot and features like Neighborhoods help tie the seller and consumer ecosystems together without requiring huge increases in headcount.
The bear case still revolves around credit and rising costs. Cash App Borrow loan origination grew 59% in Q2, but that massive tailwind will normalize in the second half of 2026. At the same time, industry-wide constraints are pushing up memory hardware costs. If Block absorbs those costs to keep acquiring sellers, its margins could shrink.
Two networks, three revenue streams
Block runs two main ecosystems. Square helps sellers take payments, manage staff, send invoices, borrow money, and use business banking tools. Cash App helps people send money, spend with a debit card, receive direct deposit, borrow small amounts, buy stocks, and buy bitcoin.
The company groups its revenue into three categories. Commerce Enablement includes payments, software, hardware, Cash App Card, Cash App Pay, buy now pay later products, and TIDAL. Financial Solutions captures banking and lending products such as Cash App Borrow, Instant Deposit, and Square Loans. The Bitcoin Ecosystem includes bitcoin buying and selling, plus projects like Bitkey and Proto.
Bitcoin can make reported revenue look large, but it is a small part of gross profit. Gross profit is the best way to read this company because it strips out the pass-through bitcoin volume and payment network costs.
The model works best when users stay inside the network. A seller that uses Square for payments, loans, and marketing is highly profitable. Block is expanding Square Financial Services to take deposits, which provides a stable, low-cost funding base to support high-margin lending.
What Block sells
Square payments and hardware
Square lets sellers accept card payments in person, online, or on mobile devices. Hardware such as readers, terminals, and registers helps anchor sellers in the system.
Square software and AI tools
Square offers point-of-sale software, invoices, team tools, and new AI assistants like Managerbot. These tools make seller revenue more repeatable.
Square financial services
Square Loans, Instant Transfer, and new deposit-taking tools give sellers faster access to money. These products add profit and lower funding costs.
Cash App payments and Cash App Card
Cash App started with peer-to-peer payments and now includes a debit card, direct deposit, and Cash App Tags. The more a user treats it like a bank account, the more Block earns.
Cash App Borrow and investing
Cash App Borrow has become a major driver of Cash App growth. The product lets users borrow small amounts of money for a flat fee.
Afterpay and Cash App Pay
Afterpay adds buy now pay later checkout, while Cash App Pay lets users pay merchants directly from Cash App.
Bitcoin, Bitkey, Proto, and TIDAL
Bitcoin trading creates a lot of revenue but little gross profit. Bitkey, Proto, and TIDAL are smaller bets that do not drive major gross profit today.
Cash App leads gross profit
The mix below relies on Q1 2026 gross profit of $1.9 billion for Cash App and $981.5 million for Square. Corporate and Other is not broken out as a material gross profit segment.
What could break the story
Hardware memory costs squeeze margins
Medium impact · High oddsIndustry-wide memory shortages are driving up hardware costs. If Block has to absorb these costs to keep hardware cheap for new sellers, profit margins on devices will fall in late 2026 and 2027.
Borrow growth hits a wall
High impact · Medium oddsCash App Borrow loan origination jumped 59% in Q2 2026. Management expects that growth to normalize in the second half of the year. If new features do not pick up the slack, Cash App growth could slow sharply.
Credit losses jump in a downturn
High impact · Medium oddsCash App Borrow is a key growth driver, making credit quality critical. A weak economy could lift losses across every cohort at once, erasing the profits from lending.
Regulators squeeze payments or crypto
High impact · Medium oddsBlock operates across money transmission, banking, consumer lending, and cryptocurrency. Each area has rules that change frequently. Compliance costs and tax disputes can create real cash burdens.
In one breath
Is Block the same company as Square?
Yes. Square changed its corporate name to Block, Inc. The Square brand is still used for seller payments, software, and banking tools.
Why does Block talk so much about gross profit?
Gross profit is a cleaner measure for Block than revenue because bitcoin trading and payment processing create large pass-through revenue. Gross profit shows what Block keeps after major direct costs.
What is the biggest risk for Block stock?
Credit and growth normalization are key risks. Cash App Borrow has grown very fast, and if consumer credit weakens, loan losses could rise. The company also faces rising hardware memory costs.
What would make the bull case stronger?
A smooth expansion of Square Financial Services into deposit-taking would lower funding costs. High adoption of AI tools by enterprise customers would also prove the new software strategy works.
