Pentagon Official Sells $24M Stake in Elon Musk's AI Company Amid Defense Deals

Emil Michael, the Pentagon's under secretary for research and engineering, declared a position in xAI valued between $500,000 and $1 million in March 2025. He sold these holdings on January 9 for between $5 million and $25 million, according to government ethics records.

The value of his stake increased by 400% to 4,800% during the period he owned it. xAI, which is behind Musk's Grok chatbot, is not publicly traded, making it unclear how Michael obtained his position, how it was priced, or to whom he sold it.

During Michael's ownership, the Pentagon announced two separate agreements with xAI. In July 2025, the Pentagon chose Grok as one of four commercial providers to help the department utilize artificial intelligence. On December 22, the defense department announced a new agreement with xAI, paving the way for the deployment of its advanced capabilities.

Richard Painter, a former ethics lawyer at the White House, said that in general, it was a criminal violation for government officials to participate in actions that benefit their own financial interests. "It sounds pretty weird," he said of the transactions.

The Pentagon stated that Michael was "in full compliance with all ethics laws and regulations. Any claims otherwise are false."