Block's (XYZ) setup heading into Q1 results on May 7 appears more fundamentally supportive as the cost reset focusing on AI-driven efficiency is showing signs of early productivity gains, BofA Securities said in a Wednesday research report.

Robust execution and disciplined messaging around margins, monetization, and capital allocation could support a constructive stock reaction, the analysts said.

AI driven efficiency initiatives are also starting to support margin expansion and better unit economics, reinforcing confidence in the company's fiscal 2026 guidance, according to the brokerage.

With incremental monetization from the Cash App promotion starting to flow through, the market will be looking for signs that performance is adequate to warrant higher revenue or earnings forecasts, according to the note.

BofA maintained a buy rating on the stock and raised the price target to $100.

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