The Week AI Changed Everything: Anthropic vs Pentagon, Block Layoffs, and Market Panic
If you needed proof that AI is no longer a future concern but a present-tense crisis, this week delivered it in spades. Over the span of just five days, we watched the stock market tumble three times over AI fears, Anthropic go to war with the Pentagon over safety red lines, and Block lay off nearly half its workforce because of “intelligence tools.”
The Stock Market’s AI Panic Attack
The Dow tumbled more than 800 points on Monday — in large part because of a Substack post from Citrini Research that laid out hypothetical scenarios for how AI could make white-collar work superfluous. The post specifically said it was fiction. It was not meant to be predictive. And yet stocks for companies mentioned in the report — DoorDash, American Express — fell anyway.
Then on Thursday, Nvidia released earnings that should have been great: profit nearly doubled, sales hit an all-time high. But Wall Street was disappointed by a somewhat lackluster outlook, fueling AI bubble concerns — that the massive investments pouring into AI infrastructure may not translate to returns.
Three separate down days in one week showed just how on edge investors are. Even good news, or entirely made-up doomsday scenarios, can trigger real panic.
Anthropic vs. The Pentagon: AI’s Red Line Moment
The biggest story of the week was Anthropic’s standoff with the U.S. Department of Defense. CEO Dario Amodei drew two non-negotiable red lines: Claude AI will not be used in autonomous weapons, and it will not be used for mass surveillance of American citizens.
Defense Secretary Pete Hegseth threatened to invoke the Defense Production Act to force access to Anthropic’s technology. He met with Amodei on Tuesday and set a Friday deadline. Hegseth also threatened to end Anthropic’s $200 million contract and potentially deem the company a “supply chain risk” — which would bar any company with military contracts from doing business with Anthropic.
President Trump escalated further on Friday, posting on Truth Social that federal agencies must “immediately” stop using Anthropic’s technology, with a six-month phase-out period. He threatened “major civil and criminal consequences.”
Anthropic’s response? “Threats do not change our position,” Amodei wrote in a blog post. “We cannot in good conscience accede to their request.”
Meanwhile, on the same week, Anthropic quietly loosened its core safety policy to keep pace with a market where competitors may not be playing by the same rules. The contradiction is striking.
Block Lays Off 4,000 — And Predicts Everyone Else Will Too
The most chilling development came Thursday when Block — the company behind Square, Cash App, and Afterpay — announced it would cut 40% of its staff. More than 4,000 people will lose their jobs, reducing the workforce to under 6,000.
Co-founder Jack Dorsey was blunt in his letter to shareholders: “intelligence tools” were the reason. And his prediction was even more unsettling: “Most companies are late. I think the majority of companies will reach the same conclusion.”
Whether or not Dorsey’s prediction proves correct, this is the first major tech company to explicitly blame AI for a layoff of this scale. The jobs apocalypse that economists have debated for years suddenly feels a lot closer.
The Bottom Line
This was the week AI stopped being theoretical. A fictional blog post crashed real stocks. The most safety-conscious AI company in the world is now fighting the U.S. government over weapons and surveillance. And a prominent tech CEO just told the world that AI is replacing half his workforce — and everyone else is next.
The question is no longer whether AI will disrupt the economy. It’s how fast, and whether anyone is prepared for what comes next.