Mark Zuckerberg's Meta Just Suffered an 11-Day Losing Streak That Erased $17.8 Billion From His Net Worth. Is the AI Bet Still Worth It?

After a mixed Q2 2026 earnings report, Meta Platforms (NASDAQ: META) declined 10% on July 30, its worst day of the year. That capped off an 11-day losing streak after what had been a strong start to the month.

Since co-founder and CEO Mark Zuckerberg owns about 13% of Meta, his net worth moves with the company's stock. This recent downturn took almost $18 billion off his net worth.

Meta and Zuckerberg are betting big on artificial intelligence (AI). Let's see why investors are worried and if this bet is likely to pay off.

Image source: The Motley Fool.

Costs are rising, and free cash flow is plummeting

Meta's top line looked good in its Q2 2026 earnings. It made $60.8 billion in sales, up 28% year over year. The rest of the report was dicier.

Diluted earnings per share (EPS) came in at $6.18, well below the expected $7.22. Costs and expenses were up 55% year over year to $42 billion. Free cash flow (FCF) collapsed to just $784 million, a far cry from the $8.5 billion in FCF it reported a year ago.

AI spending is pushing up Meta's costs significantly, and it now projects capital expenditures of $130 billion to $145 billion in 2026. That was a slight adjustment on the lower end of the range, which was previously $125 billion. Meta hasn't provided any 2027 capex guidance yet, so it has done little to alleviate fears that spending will spike even higher next year.

Will Meta's AI spending be worth it?

Meta certainly isn't the only company making massive AI investments. Alphabet, Amazon, and Microsoft are all expected to spend even more this year, so in part, this is just what it takes to compete with other hyperscalers. (NASDAQ: GOOG) (NASDAQ: GOOGL) (NASDAQ: AMZN) (NASDAQ: MSFT)

The problem is that these other three tech companies have thriving cloud businesses that help justify the cost of their AI investments. Although there has been speculation that Meta could sell compute as well, it currently doesn't, and its revenue streams are more limited.

Recent comments by Zuckerberg haven't helped to defuse those concerns. He told analysts that measuring the ROI on the build-out was "a very technical question," inviting skepticism about whether Meta has an effective payback model.

It's not all bad news. Ad impressions were up 14% year over year, and the average price per ad was up 12% year over year. Meta has attributed recent improvements in its ad performance to its AI ad tools, so it appears ROI is showing up in the existing business to some degree.

Meta still has an excellent balance sheet and is seeing revenue growth. Its AI investments are understandable, given the importance of building competitive AI models and the value of computing capacity. The current dip could be worth a look for investors comfortable with this social media company's volatility. If you decide to invest in Meta, keep an eye on its spending, FCF, and ad growth in upcoming earnings reports to measure how its AI investments are playing out.

Lyle Daly has positions in Alphabet and Meta Platforms. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, and Microsoft. The Motley Fool has a disclosure policy.