Pentagon AI Chief Made Up to $24M Selling Elon Musk’s xAI Stock Amid Pentagon Deals

Emil Michael, the Pentagon’s under secretary for research and engineering responsible for AI efforts, pocketed between $5 million and $25 million selling his shares in Elon Musk’s private AI company xAI earlier this year, government ethics disclosures reveal. When Michael joined the Defense Department in May 2025, his stake was valued at no more than $1 million, meaning his profit soared by as much as 4,800 percent.

xAI, the firm behind Musk’s Grok chatbot, is not publicly traded, and it remains unclear how Michael acquired or priced his shares. What is clear is that during the months he held the stock, the Pentagon struck two separate AI contracts with xAI. In July 2025, Grok was selected as one of four commercial AI providers for the Defense Department. Then, in December, the Pentagon — now rebranded as the Department of War — announced a new agreement with xAI to deploy its AI tools across the military’s 3 million personnel.

Michael received an ethics divestiture certificate on December 18 ordering him to sell his xAI holdings to comply with conflict of interest laws. Yet he did not sell until January 9, after the Pentagon’s latest deal with xAI was announced.

Richard Painter, a former White House ethics lawyer, called the timing “pretty weird” and warned that government officials are criminally barred from participating in decisions that benefit their financial interests. “No decent ethics lawyer would let a defense official hold AI stock while involved in AI matters,” Painter said.

The Pentagon declined detailed comment but insisted in a statement that Michael was “in full compliance with all ethics laws and regulations.” Spokesperson Sean Parnell emphasized the department’s “rigorous, multi-layered ethics framework.”

Michael’s role has been controversial beyond his financial dealings. He publicly feuded with AI contractor Anthropic, accusing its CEO of dishonesty and a “God-complex” on social media — behavior unusual for a senior defense official.

His tenure coincides with Secretary of Defense Pete Hegseth’s aggressive push to integrate AI into the military, including a recruitment campaign echoing World War II posters urging personnel to “use AI.”

Before joining the Pentagon, Michael was a top executive at Uber and is known to have social ties to Musk. Musk publicly endorsed Michael for a Trump cabinet role in 2024, though Michael was ultimately appointed to the Pentagon post instead.

Just days after Michael sold his xAI shares, Hegseth praised him at Musk’s Texas facility as the Defense Department’s “single chief technology officer,” underscoring Michael’s outsized influence over military AI strategy.

This episode spotlights the revolving door and cozy ties between top defense officials and the private AI firms they regulate — a dynamic ripe for conflicts that could undermine public trust and national security.