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Pentagon AI chief Emil Michael sold his xAI stake for up to $25 million days after a major Pentagon-xAI deal

Emil Michael, the Pentagon's Under Secretary of Defense for Research and Engineering, sold his stake in Elon Musk's xAI on January 9, 2026, held through an entity called KQ Partners, for between $5 million and $25 million -- a gain of 400% to 4,800% on a position he had disclosed at $500,000 to $1 million the year before, according to Office of Government Ethics filings. Michael had initially disclosed the xAI investment in March 2025, before joining the Pentagon; the OGE issued him a divestiture certificate on December 18, 2025 recognizing a conflict of interest, and the Pentagon announced a major agreement with xAI just days before his sale became official. The Department of War said Michael and other defense officials "are in full compliance with ethics laws and regulations," citing its "rigorous, multi-layered ethics framework." The sale was first reported in April 2026 and was among three Michael stock sales the Guardian detailed further in a September 2026 investigation.

Jurisdiction
Federal
Location
Washington, D.C.

Abuses documented

Actors

  • Emil Michael (Under Secretary of Defense for Research and Engineering)

Emil Michael, the Pentagon's Under Secretary of Defense for Research and Engineering and the department's chief technology officer, sold his stake in Elon Musk's xAI on January 9, 2026, held through an entity called KQ Partners, for between $5 million and $25 million, according to Office of Government Ethics filings -- a gain of 400% to 4,800% on a position he had disclosed at $500,000 to $1 million the year before.

Michael initially disclosed the xAI investment in March 2025, before joining the Pentagon. The OGE issued him a divestiture certificate on December 18, 2025, recognizing a conflict of interest between the holding and his Pentagon role overseeing the department's dealings with AI companies. The Pentagon announced a major agreement with xAI just days before Michael's sale became official.

The Department of War said Michael and other defense officials "are in full compliance with ethics laws and regulations. Any claims otherwise are false," citing the department's "rigorous, multi-layered ethics framework that includes financial disclosure reviews, divestitures where appropriate, and screening to prevent conflicts of interest."

The sale was first reported in April 2026. A Guardian investigation in September 2026 revisited it alongside two further stock sales Michael disclosed -- in Perplexity and in Brex LLC -- which are recorded as a separate entry (federal-self-dealing-d8cd9e4f) since both were first publicly reported in that September story, unlike the xAI sale's independently established January date.

Why we recorded this

Public office is held in trust, which is why federal ethics rules exist so officials don't profit personally from industries they oversee. Emil Michael, the Pentagon official who manages the department's dealings with AI companies, sold his stake in Elon Musk's xAI for a gain of 400% to 4,800% shortly after the Pentagon reached a major agreement with the company -- a sale the Department of War maintains was fully compliant with ethics law, but which an ethics expert says should never have been held onto in the first place. This archive records it because a policymaker profiting from a company his own department strikes deals with undermines the public's ability to trust that his decisions serve the government rather than his own portfolio. (Two further stock sales Michael disclosed later, in Perplexity and Brex, are recorded separately -- see federal-self-dealing-d8cd9e4f.)

Sources

  1. Pentagon denies wrongdoing for AI manager's $24m return on xAI investment — The Canary primary accessed September 3, 2026
  2. Who is Emil Michael? Pentagon Official Sold xAI Stake for $24M After Landing Defense Deal — International Business Times UK investigative accessed September 3, 2026
  3. Pentagon official overseeing military AI sold millions worth of stock in AI firm — The Guardian investigative accessed September 3, 2026

See also