Summary
- Emil Michael, the Pentagon's undersecretary of defense for research and engineering, divested his shares in Perplexity AI in June, netting between $5 million and $25 million, as revealed by financial records reviewed by The Guardian.
- This marks his third lucrative exit from AI-related stocks this year, following a $24 million profit from xAI in January and at least $5 million from Brex in April.
- Michael has also publicly advocated for blacklisting Anthropic, a competitor to both Perplexity and xAI, although a federal judge recently overturned that decision.
Emil Michael, serving as the Pentagon's undersecretary of defense for research and engineering as well as the chief technology officer, sold his Perplexity AI shares in June for an estimated amount between $5 million and $25 million, according to financial disclosures obtained by The Guardian.
Before his government role, Michael was part of Perplexity's advisory board but stepped down in early 2025, just before joining the Trump administration in May.
This sale isn't Michael's only profitable exit this year; he also previously sold a stake in Elon Musk's xAI, which he had reported to be valued between $500,000 and $1 million upon entering government. He sold this stake on January 9 for between $5 million and $25 million, achieving a staggering profit of up to 4,800%, as noted by IBTimes UK. This financial success is impressive for a former rideshare executive turned defense official.
The timeline surrounding these transactions is particularly noteworthy: The Office of Government Ethics granted him a divestiture certificate for his xAI shares on December 18. Just four days later, the Pentagon entered into a new agreement to utilize xAI's Grok technology on its classified networks, but Michael did not finalize the sale until January 9.
Prior to his government appointment, Michael secured a personal loan from Perplexity ranging from $250,000 to $500,000 at an interest rate of 4.57%, as per his 2025 disclosures. His ethics agreement stated that he would refrain from profiting from unvested shares of Perplexity, but the disclosures do not clarify whether his June sale involved vested, unvested, or a combination of both types of shares.
These financial disclosures come at a time when Michael has been the prominent figure in the Pentagon's efforts to blacklist Anthropic, a competitor developing the Claude AI, which directly rivals Perplexity and xAI for government contracts. Following an order from Trump on February 27 to cease using Anthropic's technology, the Pentagon officially labeled the company as a "supply chain risk," thus prohibiting military contractors from engaging with it.
However, U.S. District Judge Rita Lin ruled last week that this blacklist was an illegal act of retaliation against Anthropic for refusing to allow its models to be utilized for mass surveillance and autonomous lethal operations, thereby vacating the designation and issuing a permanent injunction. By this time, OpenAI had already taken over the Pentagon contract that was originally designated for Anthropic, with the department also signing classified-network agreements with seven other AI firms, including xAI.
Experts in ethics have expressed concern regarding the sequence of events. Richard Painter, a former White House ethics lawyer under President George W. Bush, remarked to The Guardian that Michael "should have sold all interest in the company before he started working." In contrast, a Pentagon spokesperson defended Michael, asserting that he and other defense officials are fully compliant with ethics laws and regulations, highlighting the department's comprehensive ethics review process.
Meanwhile, Perplexity is reportedly in discussions with Nvidia for a new funding round that could elevate the company's valuation to over $30 billion, representing a more than 50% increase from its $20 billion valuation in September 2025.