A high-profile US defense department official who oversees the agency’s artificial intelligence efforts made a profit of up to $24m selling a private investment he held in Elon Musk’s AI company earlier this year, according to government ethics records released this month. The value of his stake totaled a maximum of a million dollars when he joined the department.
Emil Michael, who is the Pentagon’s under secretary for research and engineering under the Trump administration, oversees negotiations with AI companies and has been pushing the defense department to rapidly increase the widespread use of AI.
Michael declared in March 2025 that he had a position in xAI valued between $500,000 and $1m.
He sold those holdings on 9 January for between $5m and $25m, according to disclosures filed with the office of government ethics (OGE). He reported that he owned the xAI shares through a company called KQ Partners. (Government financial disclosure reports are designed to show ranges of holdings, rather than precise amounts.) The increase in value amounts to a gain of between 400% and 4,800%.
xAI, which is the company behind Musk’s Grok chatbot, is not publicly traded, so it is unclear how Michael obtained his position, how it was priced or to whom he sold it.
During the period that Michael owned the xAI stock the Pentagon announced two separate agreements with the firm. In July 2025 the Pentagon chose Grok as one of four commercial providers that would help the department utilize artificial intelligence.
On 18 December, seven months into running the Pentagon’s research and engineering efforts, Michael received a divestiture certificate from the OGE that said he would sell his xAI stock to comply with conflict of interest laws.
Four days later, on 22 December, the defense department, which now refers to itself as the Department of War, announced a new agreement with xAI. “Today, the War Department officially entered into an agreement with xAI, paving the way for the deployment of its advanced capabilities on GenAI.mil. This move builds on the rapid deployment of cutting‑edge AI across the Department’s 3 million military and civilian personnel.”
Michael did not ultimately sell his position in xAI until 9 January, disclosures show.
Richard Painter, a former ethics lawyer at the White House under President George W Bush, said that in general it was a criminal violation for government officials to participate in any government actions that would benefit their own financial interests. “It sounds pretty weird,” he said of the transactions. “There is no way that a decent ethics lawyer would let a [defense department] official hold on to AI stock while he’s involved in AI matters. You would have a very high chance of violating the criminal statute.” Federal law prohibits officials from taking actions in their jobs that benefit their own financial interests.
The Pentagon did not respond to detailed questions, but sent a statement attributed to spokesperson Sean Parnell: “The Department of War maintains a rigorous, multi-layered ethics framework that includes financial disclosure reviews, divestitures where appropriate, and screening to prevent conflicts of interest.”
The statement said Michael was “in full compliance with all ethics laws and regulations. Any claims otherwise are false.”
Michael was sworn in as under secretary of defense for research and engineering last May. In recent months he became the face of the Pentagon’s highly public dispute with the AI contractor Anthropic after the firm insisted its technology could not be used for domestic surveillance or for autonomous killing.
Michael, in what would be seen as unusual conduct for a defense department official in most administrations, posted personal insults on X targeting the CEO of the company, calling him a “liar” who had a “God-complex”.
Michael’s role overseeing AI acquisition comes as the US secretary of defense, Pete Hegseth, has become an insistent promoter of AI in the military. The halls of the Pentagon were papered with posters evocative of an iconic second world war recruiting poster, but with the words “I want YOU to use AI.”
Musk launched xAI in 2023, and has raised billions in funding for it from major equity companies and the Qatar Investment Authority. xAI’s Grok chatbot has been embroiled in controversy over sexualized deepfakes.
Before his nomination to the under secretary job by Trump, Michael had a long career in business, including a high-profile stint as chief business officer at Uber. It has been widely reported that Michael knows Musk socially. His name was initially floated in 2024 as a contender for Trump’s secretary of transportation, and Musk, whose Tesla operations could be affected by that department’s actions, tweeted approvingly that Michael “would be effective” at the role, but Trump chose someone else.
When Hegseth spoke at Musk’s Stargate facility in Texas, just three days after Michael sold his xAI holdings, he gave a shoutout to the under secretary, who was sitting right in front of him.
“Our under secretary of war for research and engineering, Emil Michael, right here in the front row, is the war department’s single chief technology officer. One CTO for the entire enterprise,” he said.
