Meta lacks Scale AI control even after risky investment in startup, Needham says

** Meta META loses over $14 bln cash for Scale AI stake buyout without gaining control over the startup's strategy, as the deal seems to be about securing talent at a very high cost and a considerable risk, Needham says

** Instagram and Facebook parent would not have direct access to the cash that Scale AI earns unless the startup decides to distribute it to all shareholders, including Meta, which is not guaranteed, brokerage says

** Needham, however, upgrades the rating to "hold" from "underperform" citing better-than-expected trends due to Meta's software-based, highly productive business model

** But brokerage says that Scale AI expensive deal reduces Meta's cash at a time when the social media company needs resources to better compete AI race

** Meta has unveiled its "Superintelligence Labs" headed by former CEO of Scale AI, according to a memo seen by Reuters

** 63 of 71 brokerages rate the stock "buy" or higher, 6 "hold" and 2 "sell," their median PT is $722 - LSEG data

** As of last close, stock has risen ~22% this year