A senior Pentagon official who oversees the Pentagon’s artificial intelligence efforts sold personal investments in Elon Musk’s AI companies for a profit of up to $24 million earlier this year, according to government ethics records released this month. When he joined the division, his stakes totaled up to $1 million in value.
Emile Michael, the Pentagon’s undersecretary for research and engineering under the Trump administration, is overseeing negotiations with AI companies and pushing the Pentagon to rapidly expand the use of AI.
In March 2025, Michael declared a position in xAI worth between $500,000 and $1 million.
He sold those holdings on Jan. 9 for between $5 million and $25 million, according to disclosures filed with the Office of Government Ethics (OGE). He reported that he owned xAI stock through a company called KQ Partners. (Government financial disclosure reports are designed to show the extent of holdings, not exact amounts.) The increase in value equates to a gain of 400% to 4,800%..
xAI, the company that developed Musk’s Grok chatbot, is not publicly traded, so it’s unclear how Michael acquired the position, how he priced it, and who he sold it to.
During the period Michael owned xAI stock, the Department of Defense announced two separate contracts with the company. In July 2025, the Department of Defense selected Grok as one of four commercial providers to help leverage artificial intelligence.
On Dec. 18, seven months after starting the Department of Defense research and engineering effort, Michael received the sale. The certificate from OGE stated that xAI shares would be sold to comply with conflict of interest laws.
Four days later, on December 22, the Department of Defense (now known as the Department of the Army) announced a new agreement with xAI. “Today, the Department of the Army formally entered into an agreement with xAI, paving the way to deploy its advanced capabilities to GenAI.mil. This move builds on the rapid deployment of cutting-edge AI across the Department of the Army’s 3 million military and civilian workforce.”
It was revealed that Michael finally sold his position in xAI on January 9th.
Richard Painter, who served as White House ethics lawyer during President George W. Bush, said it is generally a crime for government employees to participate in government actions that serve their own financial interests. “It seems pretty strange,” he said of the deal. “No sane ethical lawyer would allow something like this to happen. [defense department] Officials will continue to hold AI shares while involved in AI issues. It is very likely that you would be violating criminal law. ” Federal law prohibits employees from taking actions on the job to benefit themselves financially.
The Department of Defense did not respond to detailed questions, but “The Department of the Army maintains a rigorous, multi-layered ethical framework that includes reviews of financial disclosures, divestitures where appropriate, and reviews to prevent conflicts of interest,” said a statement from Spokesman Sean Parnell.
The statement said Michael was “in full compliance with all ethics laws and regulations. All claims to the contrary are false.”
Michael was appointed as the undersecretary of defense for research and engineering last May. In recent months, he has become the face of a very public dispute with the Pentagon after AI contractor Anthropic argued that its technology could not be used for home surveillance or autonomous killing.
In a move that would be considered unusual for most government Department of Defense officials, Michael posted personal insults against X targeting the company’s CEO, calling him a “liar” with a “God complex.”
Michael will be taking on the role of overseeing AI acquisition because U.S. Secretary of Defense Pete Hegseth is a strong advocate for the introduction of AI within the military. In the halls of the Pentagon, posters reminiscent of the iconic World War II draft posters read: “We want you to use AI.”
Musk launched xAI in 2023 and raised billions of dollars from major stock companies and the Qatar Investment Authority. xAI’s Grok chatbot is embroiled in controversy over sexual deepfakes.
Before being nominated by President Trump to serve as deputy secretary, Michael had a long career in the business world, including a high-profile stint as CEO of Uber. It has been widely reported that Michael knows Musk socially. Musk, whose name was initially floated as a candidate for Trump’s transportation secretary in 2024 and the department’s actions could affect Tesla’s business, tweeted favorably that Michael was “qualified” for 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 shout-out to the undersecretary sitting in front of him.
“Emile Michael, the Under Secretary of the Army for Research and Engineering, here in the front row, is the only chief technology officer of the Department of the Army. He is the single CTO of the entire enterprise,” he said.
